Health Care Law Crushes Consumers’ Choices and Jobs
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August 1 ushered in a new portion of the Patient Protection and Affordable Care Act (PPACA). Health plans are now mandated to offer a sundry list of “free” health care products and services.
Nothing’s really free. What will happen is the costs will be shifted – patients will not pay co-pays when they elect to purchase these products but will instead pay higher premiums overall – regardless of whether they purchase these products. We’re pushed closer to a one-size-fits-all health plan designed by Washington bureaucrats instead of a plan tailored to individuals' needs.
Since I’m on the subject of the health care law, I want to point out a distressing story of an Indiana company who shelved expansion plans because the 2.3% tax on medical device revenue will add too much in new costs. Hot Air’s Mary Katharine Ham writes:
The new tax will cost Cook Medical Inc. between $20 million and $30 million a year, Pete Yonkman, executive director of Cook’s strategic business told the Indianapolis Business Journal, limiting the amount Cook can spend on new plants. It took $30 million to revamp an abandoned factory in Canton, Ill. last year that will eventually employ 300 people in this small town.
“We had hoped, as we get bigger, that that would be our model for expansion,” Yonkman told the Indianapolis Business Journal. “To take these small manufacturing facilities and bring them to these communities, that had been hard hit by jobs leaving because they work ethic is amazing and the people are really supportive and excited.”
The medical device tax is just one of many that amount to a trillion-dollar tax increase. House Ways and Means Committee staff put together this list based on Congressional Budget Office and Joint Committee on Taxation estimates:
| Provision | March 2010 Estimate (‘10-‘19) |
June/July 2012 Re-Estimates (‘13-‘22) |
| Additional 0.9 percent payroll tax on wages and self-employment income and new 3.8 percent tax on dividends, capital gains, and other investment income for taxpayers earning over $200,000 (singles)/$250,000 (married) | 210.2 | 317.7 |
| “Cadillac tax” on high-cost plans * | 32.0 | 111.0 |
| Employer mandate * | 52.0 | 106.0 |
| Annual tax on health insurance providers * | 60.1 | 101.7 |
| Individual mandate * | 17.0 | 55.0 |
| Annual tax on drug manufacturers / importers * | 27.0 | 34.2 |
| 2.3 percent excise tax on medical device manufacturers / importers * | 20.0 | 29.1 |
| Limit FSAs in cafeteria plans * | 13.0 | 24.0 |
| Raise 7.5 percent AGI floor on medical expense deduction to 10 percent * | 15.2 | 18.7 |
| Deny eligibility of “black liquor” for cellulosic biofuel producer credit | 23.6 | 15.5 |
| Codify economic substance doctrine | 4.5 | 5.3 |
| Increase penalty for nonqualified HSA distributions * | 1.4 | 4.5 |
| Impose limitations on the use of HSAs, FSAs, HRAs, and Archer MSAs to purchase over-the-counter medicines * | 5.0 | 4.0 |
| Impose fee on insured and self-insured health plans; patient-centered outcomes research trust fund * | 2.6 | 3.8 |
| Eliminate deduction for expenses allocable to Medicare Part D subsidy | 4.5 | 3.1 |
| Impose 10 percent tax on tanning services * | 2.7 | 1.5 |
| Limit deduction for compensation to officers, employees, directors, and service providers of certain health insurance providers | 0.6 | 0.8 |
| Modify section 833 treatment of certain health organizations | 0.4 | 0.4 |
| Other revenue effects | 60.3 | 222.01 |
| Additional requirements for section 501(c)(3) hospitals | Negligible | Negligible |
| Employer W-2 reporting of value of health benefits | Negligible | Negligible |
| 1099 reporting for small businesses | 17.1 | Repealed by P.L. 112-9 |
| TOTAL GROSS TAX INCREASE (BILLIONS OF DOLLARS) |
569.2 | 1,058.3 |
Prepared by Ways and Means Committee Staff – July 24, 2012
The law continues to be more unpopular than popular according to the Kaiser Family Foundation. These latest stories won’t improve that perception. This is more reason why the health care law should be repealed and replaced with reforms that expand patients’ choices and lower costs without weighing the economy down with a trillion dollars in new taxes.
