The national focus on the financial hit Americans will take if the Bush-era tax cuts expire at the end of the year has distracted attention from the billions of dollars in new personal and business taxes taking effect in the next two years to pay for the 2010 health care law.
Even as President Obama negotiates a deal to lessen the impact of potential end-of-year tax hikes and spending cuts, his administration is following through on the Affordable Care Act.
Beginning in 2013, new fees will hit individuals earning more than $200,000 and couples making more than $250,000, a threshold President Obama considers wealthy with his demand that they pay higher income taxes as well. Earnings above those levels will be subject to a 0.9 percent unearned income Medicare contribution in addition to the 1.45 percent Medicare payroll tax paid by employers and employees. Those same workers will be subject to a new 3.8 percent tax on investment income.
The government expects to raise about $318 billion over 10 years from the two new taxes, although the Medicare tax will go into the general fund where it can be used for any purpose.
Regulations just issued by the Department of Health and Human Services levy a $63.25 per-head yearly fee on health plans to defray the costs of extending coverage to uninsured Americans starting in 2014. It is expected to raise $12 billion in the first year but decrease to $8 billion in 2015 and $5 billion in 2016 as the three-year temporary assessment is phased out, assuming Congress doesnt extend the fee to raise additional funds.
For large employers who provide health insurance, the surcharge could amount to millions of dollars in added costs. The rising expense will give companies large and small another reason in this uncertain economy to rethink plans to invest in equipment upgrades, expand production or hire new workers. Employees will feel the impact in higher costs passed onto them. Consumers could see higher prices and be left with less disposable income for spending needed to stimulate the economy.
The fee applies to all major medical insurance plans so Americans insured through private plans will also be assessed the $63 per-head fee. According to data accompanying the regulation, about 190 million Americans are covered through employer or individual health plans. Families sacrificing to pay thousands of dollars in private health insurance premiums every year will be asked to ante up more, not to improve their benefits but to underwrite costs to cover those with pre-existing conditions since insurers can no longer turn them away.
Then-Speaker of the House Nancy Pelosi famously said during debate of the bill in 2010 that we have to pass the bill so that you can find out whats in it. Two years later, were still learning the costs.