Against the widespread wishes of the American people, Democrats passed the Patient Protection and Affordable Care Act ("ObamaCare") of PPAC into law in 2010 promising, among other things, to "correct the deficiencies" of medical care. Yet the ironically titled law, in its 2,800 pages of federal intervention into the economy, is failing to "protect" anyone as health insurance becomes even less "affordable."Even worse, ObamaCare is restraining an economic recovery and destroying jobs by burdening entrepreneurs and employers with tax increases and costly regulations. Congress can help end the economic uncertainty by keeping our Pledge to America and repealing this disastrous law. This month was a milestone for PPAC as the health insurance exchanges opened to memorialize the legacy of Obama as his experimental economic policies continue to plague our growth.As the law became a reality on October 1, 2013, over 50% of all Americans do not understand how this new law is structured and even more of them do not understand the economic ramifications. This became evident when I overheard a conversation between two employees in my office this past week. Both of them in the late 20's, the very demographic that proponents of the plan are expecting to enroll in droves, the young and healthy millennials.As the conversation between these two people developed, through the door outside my office, I overheard several conversations about the health care bill. One of these people was anticipating the arrival of a nationwide insurance exchange coming online in a few days to get his "free health care plan" we will call him Keith. The other, we will call him Scott, proceeded to explain to Keith that there was nothing free in ObamaCare. I was astonished at the exchange between these two bright and educated people. This is a classic case of a low-information consumer vs. a highly informed person. Keith, apparently, has not recently had health insurance coverage and was under the impression he was going to get a limitless benefit from the federal government. Scott, to the contrary, explained that this was the biggest political Ponzi-scheme on the planet and that Keith was going to have to pay for his coverage. In reality, Keith was hugely disappointed, no different from the millions who recently discovered that no one is getting free health insurance.What is the reality of this controversial piece of legislation? Could it be that the actuaries that the democratic pollsters hired to run the numbers got it wrong? Let us look at some economic facts about this legislation.First of all, when the health insurance exchanges opened up on 10/1, there was a lot of perplexity, not because the web site had mal-functioned, but because millions were expecting to get this new benefit for free! One can only imagine the bewilderment experienced when these Americans realized that they actually have to pay for this service. What happened? Didn't the democrats promise health reform and didn't they promise health insurance coverage for the 45 plus million Americans without? They sure did, but they failed to fully explain how devastating this was going to be to all Americans by in large. According to the U.S. Census Bureau current population survey, consider the following statistics as part of the discussion as it related to the number of un-insured Americans (the percentages are a comparison to the total population):Total number not covered by insurance 47.9 million - 15.4%Total of these in families 35.8 million - 14.2%Where do the uninsured live?Living in the Northeast 5.9 million - 10.8%Living in the Northwest 7.9 million - 11.9%Living in the South 21.5 million - 18.6%Living in the West 12.4 Million - 17.0%How much money do people without health care make?Income level of less than $25k 14.5 million - 24.9%Income level between $25 - 49.9k 18.8 million - 21.4%Income level between $50 - 74.9k 7.0 million - 15.0%Income level of $75k plus 7.7 million - 7.9%How old are the uninsured?Between the ages of 25-34 11.4 million - 27.4%Between the ages of 35-44 8.4 million - 21.1%Between the ages of 45-54 7.8 million - 18.2%BY association, it would seem that the demographics of uninsured Americans are relatively spread evenly between all social classes and economic populace. In actuality, the overall concept to offer all Americans with high quality health care coverage is a step in the right direction. But a government sponsored bill to force people into a health exchange is not the answer, especially when it is expected to be funded by citizens who don't need it to pay for citizens who do, much like social security.
It is going to present a huge burden on taxpayers in America, so how much is it really going to cost the American taxpayer?Actuaries, who helped designed the plan, are expecting the uninsured Americans between the ages of 25 and 34 to enroll with income levels from $25k trough$50k. Unfortunately, this is not going to happen, first, young Americans are struggling to make ends meet, if they do not have an employer sponsored health plan, they are not going to take money from disposable income regardless of the penalty. Especially when the penalty is insignificant in contrast to the premiums which we will prove later.A family of 4 making $40,000 annually will pay an annual premium of $8,290 with a tax credit of $6,325, this family will pay $1,373 after the tax credit which is 3.9% of gross income but actually 13% of take home pay.A family of 4 making $60,000 annually will pay an annual premium of $8,290 with a tax credit of $3,377, this family will pay $4,913 after the tax credit which is 8.2% of gross income but actually 20% of take home pay.A family of 4 making $80,000 annually will pay an annual premium of $8,290 with a tax credit of $690, this family will pay $7,600 after the tax credit which is 9.5% of gross income but actually 24% of take home pay.This family of four, based on the government figures, is expected to pay health insurance out-of-pocket costs anywhere from 3.9% to 9.5%.
In reality, ObamaCare is expected to cost this family of four anywhere from 13% to 25% of disposable income because of after-tax income. The percent illustrated in column (1), based on the government estimates takes the actual net tax premium and divides it gross income. In reality, it needs to be divided by net income after paying income taxes, social security deductions, Medicare deductions and other payroll taxes.
This family of 4 will have $690.00 per month less income because they will have to pay the premium monthly with the tax credit coming in the following tax year. For example, in 2014, this family will have to fund the policy for 12 months from disposable and the tax credit from column (3) will not be realized until early in 2015. Once again, the government is using Obama accounting to present a really bad program.
Tax Increases - Between the years of 2014 and 2019, there are a multitude of taxes that will be imposed on Americans from an increase in payroll taxes, mandates on business taxes, a decrease in Medicare payments for seniors that will need to be absorbed through other health insurance increases, and a myriad of other taxes imposed on middle to lower income tax payers. Please visit the heritage foundation website to review these taxes in detail.
If the taxpayer opts out of ObamaCare, they will have to pay a penalty equal to 1% of gross income or $95.00 per adult in 2014, increasing to 2.5% of gross income and $695 per adult in 2016. It will be more cost-effective for the family to pay the penalty and not incur the annual out-of-pocket costs.It's Cheaper to pay the tax penalty than to enroll in ObamaCare - Based on this analysis, it is cheaper to pay the tax penalty than it is to subscribe to ObamaCare. Why in the world would a healthy person enroll in a government sponsored health plan knowing it will cost them an extra $600 per month in disposable income? It's not going to happen.So who is going to enroll in ObamaCare? The indigent and the sick! Taxpayers who could not afford any kind of health insurance prior to the passing of the PPAC. This will drive up the cost of coverage in itself, because the young and healthy are not willing to bear the cost burden to fund the indigent and otherwise ailing population segment.Widespread Ignorance - That is correct, widespread ignorance best describes the concept of this policy. The taxpayers enrolling in the program have no idea how much it is going to cost them and the people employed to aid the enrollees have even less knowledge on the details of ObamaCare.At the end of the day, this will cost Americans dearly, especially hurt will be the low information Americans who believed that this administration actually had their best interest in mind. Bigger government and government administered health insures has failed even before it got started. This will cost taxpayers and the economy anywhere $100 billion annual y to as much as $300 billion annually depending upon the number of people who actually enroll in the program. Economically speaking, this is the most fragile time in American history in the last 100 years, regardless of the outcome, whether are not people enroll or don't enroll, they effect on our economic recovery will be devastating.
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