Monday, July 2, 2012

The More Perfect Union Primer on the Affordable Care Act

If you're like me, then you've spent the last few days on Facebook looking at your friends' posts about "Obamacare" while biting your tongue instead of responding to their clearly baiting posts.  Well, here's to combat some of the falsehoods running around out there.

1. The majority of Americans want to repeal Obamacare.

This may or not be true.  I was watcing CNN today and they announced that 50% of Americans agree with the Supreme Court's decision while 49% disagree.  There was a +/- 2.5% sampling error.  But in most cases the polls are not putting sufficient qualifiers in place to exclude those who think that the Affordable Care Act should have gone further or those who support other ways of reforming health care (such as those who support a single payer system).  Without sufficient qualifiers, one is merely using the numbers to say exactly what they want instead of reporting what the polls actually say.

2. It's a budget busting bill.

This claim has been made by Michele Bachmann among other Republicans.  According to the Congressional Budget Office, the bill would lower the deficit by about $120 billion over the next ten years.  It's somewhat interesting to note that the Repeal the Job Killing Healthcare Act will increase the federal deficit by $210 billion from 2012-2021.  In the report by the CBO.  Over the eight years covered by both of the studies (2012-2019), the CBO estimated that the Affordable Care Act would reduce federal deficits by $132 billion while the repeal of the act would increase the deficit by $119 billion.  It's important to note that the CBO is not infallible and that their projections are primarily baed on a 7% increase in Medicaid spending over the ten years as opposed to a 10% increase.  Republicans argue that the CBO's estimates are either too optimistic or just plain wrong.

Update: The CBO actually revised their figures in March and found that the act would reduce the federal deficit by $210 billion over the years 2012-2021.

3. This will increase taxes by $500 billion. 

Technically, the tax revenue over the next 10 years is $437.8 billion.  Republicans have tended to include fees or penalties for those who don't obtain health insurance and business that will not provide health insurance to bump it up to $500 billion.

4. My taxes will increase due to this bill.

If you're friends with me on Facebook , you will know that I asked for sources from everyone who made this claim.  As of this writing, I have not received any of these sources.  According to the Joint Committee on Taxation, here are the tax increases.  FactCheck and PolitiFact also summed up the tax increases.  Here's PolitFact's summation of the tax increases:

• Starting in 2013, Medicare payroll taxes increase 0.9 percentage points for people with incomes over $200,000 ($250,000 for couples filing jointly). Also, people at this income level would pay a new 3.8 percent tax on investment income. The 10-year cost: $210.2 billion.

• Starting in 2018, a new 40 percent excise tax on high-cost health plans, so-called "Cadillac plans" (over $10,200 for individuals, $27,500 for families), kicks in. That's expected to bring the government a total of $32 billion in 2018 and 2019.

• Starting in 2011, there's a new fee for pharmaceutical manufacturers and importers. That's expected to raise $27 billion over 10 years.

• Starting in 2013, a 2.3 percent excise tax on manufacturers and importers of certain medical devices starts. The 10-year total: $20 billion.

• Starting in 2014, a new annual fee on health insurance providers begins. Total estimated 10-year revenue: $60.1 billion.

• Starting in 2013, the floor on medical expense deductions on itemized income tax returns will be raised from 7.5 percent to 10 percent of income. That's expected to bring in $15.2 billion over the next 10 years.

• Starting in 2011, a 10 percent excise tax on indoor tanning services. That's expected to bring in $2.7 billion over the next 10 years.   

FactCheck found that a large majority of Americans will NOT see a direct tax increase from the health care law.

Additionally, if you are to blame Obama for the tax increases for the healthcare bill then you also have to give him credit for lowering payroll taxes by2% and Social Security taxes by 2%. 

5. This will be the biggest tax increase in the history of the world.

PolitiFact compares tax increases over time by looking at the tax increases as a percentage of GDP. Here is what they found. The tax increases by 2019 would be 0.49% of GDP which is certainly a tax increase but it is no bigger than the Tax Equity and Fiscal Responsibility of 1982 which was 0.8% of GDP.  It was found to be about the 5th biggest tax increase by this measure since 1968.   It doesn't even come close to the top 5 in the history of the United States, much less, the world.

6. Companies are just going to opt out and pay the fine or they're going to outsource jobs so that they don't have to pay for health insureance.  Overall, it is a job-killing bill.

This one is kind of complicated.  The CBO reports that 650,000 people will choose to work less or retire early, primarily because of the new law.  There would be 150,000 to 300,000 jobs lost, all minimum wage or near minimu wage positions.  The National Federation of Independent Businesses stated that 1.6 million jobs would be lost but the study is not based on what actually became law and mainly focused on small business with less than 50 employees.  Businesses with 50 or less employees would not have to offer health insurance with the new law.

What about the mandate?

It's considered a tax, as Chief Justice Roberts stated because the "penalty was not intended to be a criminal fine, because those who choose to pay it, rather than honor the mandate to obtain health insurance, would be in full compliance with the law."  The IRS will collect the penalty, which is another reason it is considered a tax. 

The minimum penalty will be $95 per person in 2014, the first year that it is required for individuals to et health care coverage.  It will rise to $325 the following year.  It will be $695 when it is finally fully phased in. 

But the penalty can never exceed the cost of the national average premiums for the lowest-cost “bronze” plans being offered through the new insurance exchanges called for under the law. We have no way of knowing what that average rate might turn out to be in 2014, but there is reason to think it could be quite high.  Please read FactCheck's answers to FAQ's about the mandate.

A tax is assessed for each month that a person is not covered.  It is pro-rated so that if someone does not have coverage for a month, it will be 1/12 of the penalty.

The law prohibits the IRS from seeking to put anybody in jail or seizing their property for simple refusal to pay the tax. 

FactCheck answers who's exempt.  This is who they found.

Individuals who can't afford coverage: If an employer offers an employee coverage that is more than 8% of an individual's income then they are exempt.

Taxpayers with income below filing threshold: If you earn too little to file for tax returns, you are exempt.  That is $9,500 for individuals and $19,000 for couples, right now.

Hardships: The Secretary of Health and Human Services can exempt others if he r she determines they suffered hardships with respect to their capability to obtain coverage.

Other exemptions: Also exempt are members of Indian tribes, persons with only brief gaps in coverage, and members of certain religious groups currently exempt from Social Security taxes.

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