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Analysis: HealthCare Costs & ObamaCare: How They Affect Us

October 16th, 2013
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10.16.2013, UPDATED 8:49AM

American citizens face higher taxes and healthcare premiums to pay for the uninsured who account for most (67.3%) of all healthcare costs in the USA. Chart by NetAdvisor.org®

American citizens face higher taxes and healthcare premiums to pay for the uninsured who account for most (67.3%) of all healthcare costs in the USA. Chart by NetAdvisor.org®

Analysis: HealthCare Costs & ObamaCare: How They Affect Us

Proof: ObamaCare fails to solve the problem it was allegedly intended to solve.

original article written by Net Advisor

EXCERPT: Based on the notion that government would somehow create a program that would lower healthcare costs, it is actually doing the opposite. ObamaCare is impacting business and consumers immediately and it is not even fully implemented until 2020.

We took a look at the penalties to consumers and business for not having a government approved healthcare plan. ObamaCare creates incentives for employers to have fewer people working, export jobs, cut work hours so people earn less money.

Some American citizens run the risk of losing their jobs to undocumented workers, as undocumented works are exempt from all taxes, penalties, or being required to have a healthcare plan. This may or may not have been the intent, but this is the impact of ObamaCare.

Those with low and Middle-Class incomes will be impacted the most to cover higher health premiums and more taxes to support this government system. Although there are some apparent government tax credits and subsidies for lower income people, the remaining taxpayers will shoulder these costs.

WASHINGTON DC. Most of the American’s healthcare costs are not a major issue. The real issue is the uninsured who burden the system the most.

An August 2013 healthcare study found:

* 5% of the Uninsured Account For 67.3% of All U.S. Health Care Costs.

* 50% of the U.S. Population Account For 97.2% of All Health Care Costs.

— Source: U.S. Department of Health & Human Services (PDF – highlight added)

These statistics do not include the costs of insurance services used by those over the age of 65.

Now we know why healthcare costs going up so much. A very small part (5 percent) of the U.S. population is using up most of the healthcare services, eating up most (67.3 percent) of the costs of healthcare. This small group of the uninsured is contributing zero to (clearly) a trivial amount compared to the actual costs of the services provided.

Now, under the ObamaCare law, the uninsured is supposed to buy insurance. The problem is if they could not afford insurance before why do we think they will be able to afford insurance now?

According to the CBO, 31 million people will still be left “UNINSURED” under ObamaCare.

“CBO and JCT now expect that, as a result of those regulations, between 500,000 and 1 million fewer people will obtain health insurance coverage each year. In our current projections for 2023, the ACA reduces the number of people without health insurance by 25 million, leaving 31 million uninsured (compared with 30 million in our February estimate. “

— Source: Congressional Budget Office (CBO)

Thus ObamaCare fails to solve the problem it was allegedly intended to solve.

[1] New Taxes Hurt Lower and Middle-Class Incomes 

Despite his campaign pledge not raise taxes on the Middle-Class, President Obama raised taxes on everyone who has an income in 2013. Government seeks to increase taxes to pay for these ever growing costly programs. It is apparent that some in Washington think that bureaucrats can run a business with your money better than a business using their own money.

In 2013, those with incomes of just $36, 251 (single filer) or $72,501 (married, joint filer) are subject to 25% federal tax on their income before any deductions (Source: bankrate.com). Democrats have sought to raise $1 Trillion (video) in new revenue (taxes) this year. House Republicans have worked to block this move.

[2] Can Tax Credits Lower My Health Insurance Costs?

There is talk about how government is going to subsidize healthcare costs (using other taxpayer’s money). The government will use “tax credits,” and this will somehow reduce our health insurance costs. This is one of the biggest con jobs people will unknowingly fall for.

First of all, the government is NOT giving us any money to help pay for health insurance costs. What the government is offering to those who qualify are “tax credits.” So what is a tax credit?

“A tax credit reduces the amount of tax for which you are liable. Unlike a deduction, which reduces the amount of income subject to tax, a tax credit directly reduces your tax liability.”

— Source: 1040.com

In other words, if you owe let’s say $6,000 in federal taxes and if you have a $2,700 tax credit, then you owe $3,300 in taxes.

If your family paid let’s say $6,000 in health care premiums that year, the amount of healthcare premium one can deduct is, ZERO. The amount of money the government is paying for our health insurance is, ZERO.

All that’s happening is the amount of federal income tax one would have to pay is being reduced. Government views this as paying for part of your health care costs; but in reality you are still paying 100% of the costs upfront.

If one qualifies for the Health Coverage Tax Credit (HCTC) and their tax liability is less than the government tax credit, one could be eligible for a tax refund.

[3] Surprise Tax Bills?

In order to qualify for the tax credit, one has to project their income for the following year. If your income ends up being higher than you projected, then you could reduce your tax refund or be subject to a tax bill as the government will take the proportionate tax credit back says the Associated Press (PDF).

[4] How ObamaCare Can Increase Your Taxes EVERY YEAR for Life

Not just the wealthy, but young, middle-class Americas will face higher taxes – regardless of income – thanks to ObamaCare:

“Buried in Nancy Pelosi’s health-care bill is a provision that will partially repeal tax indexing for inflation, meaning that as their earnings rise over a lifetime these youngsters can look forward to paying higher rates even if their income gains aren’t real.”

— Source: Wall Street Journal (PDF), 11-06-2009

In other words, taxes are adjusted for inflation based on the government’s Consumer Price Index (CPI) each year.

If CPI is zero, which it never is, then you pay the regular taxes on your income. If the CPI is 2% in a given year, then the tax brackets will go up by 2% the following year.

The result: Your taxes will go up even if your income stays the same. The CPI will forever be readjust the tax brackets annually tacking on more taxes based on that particular years government’s official inflation (CPI) numbers.

its-not-a-tax

[5] Minors – INCLUDING Infants, Subject to the ObamaCare Tax

Minors and infants are also subject to pay one-half of the tax unless covered under their parents insurance for them.

“(iii) Special applicable dollar amount for individuals under age 18. If an individual has not attained the age of 18 before the first day of a month, the applicable dollar amount for the individual is equal to one-half of the applicable dollar amount (as expressed in paragraph (b)(2)(ii) of this section) for the calendar year in which the month”

— Source: Federal Register, iBid, page 53,663 – relevant PDF pages 17-18.

[6] Insurance Companies Subject to ObamaCare Tax = Consumers Pay

ObamaCare is also raising taxes on health insurance companies who are passing along those higher taxes in the form of higher premium payments to consumers who have health insurance.

“…(ObamaCare) law also includes a huge new fee on insurance companies that will raise $102 billion over the next decade, with the costs passed down to middle-class families in the form of higher premiums.”

— Source: Investors Business Daily (IBD)

For (especially) young people in excellent health who previously choose not to purchase health insurance, now are required by law (under ACA – “ObamaCare”) to buy health insurance or pay a tax penalty enforced by the IRS.

[7] Tax Penalty If Have No Qualifying Health Insurance

Under new rules as per §1.5000A–4 “Computation of shared responsibility payment” states that the penalty for not having the government’s required minimum coverage [unless have an (illegal) rare exemption] the fine (tax) is as follows:

(A) $95 in 2014;
(B) $325 in 2015; or
(C) $695 in 2016.

If you make any money and don’t have a qualifying health plan, the above fine (tax penalty) may actually be greater than you think.

…(as defined in §1.5000A–3(f)(2))…income percentage means —

“Beginning in 2013;
(B) 1.0 percent for taxable years beginning in 2014;
(C) 2.0 percent for taxable years beginning in 2015; or
(D) 2.5 percent for taxable years beginning after 2015.”

Thus the ObamaCare tax for not having healthcare is the greater of the stated tax above ($95, $325, $695 in 2014-2016) or a percentage of your income.

— Source: Federal Register, Vol. 78, Number 169, dated Aug 30, 2013, “Rules and Regulations,” page 53,662, showing 19 related pages in this government (local PDF).

For example, in 2015 and thereafter if a household’s income is say just $50,000 and they have no health insurance, they could pay $50,000 x 2.5% (ObamaCare tax penalty) or $1,250 per year or $104.17 per month, for NOT having Obama government-mandated health insurance.

There may be some reductions in this amount when factoring in tax deductions, but basically one will have to pay for something they don’t own, don’t want, or don’t benefit from. This is the basic principle of how Socialism works – a redistribution of capital.

President Obama unilaterally larger employers an 1-year extension from the employer mandate.  Employer Mandate: Chart by Cigna Insurance.

President Obama unilaterally larger employers an one year extension from the employer mandate. Employer Mandate: Chart by Cigna Insurance.

[8] EXEMPTIONS: Nevada and Illegal Aliens Benefit From ObamaCare

Majority Whip Senator Harry Reid (D-NV) who is a leading proponent for ObamaCare has previously secured his entire state a partial waiver because it could cause a “destabilization” of the local market (meaning the entire state).

Those who are in the U.S. illegally are also exempt from requiring to have ObamaCare or pay any fines (tax penalty). Thus U.S. employers now have an incentive to hire undocumented (illegal aliens) over U.S. citizens. Under ObamaCare, employers who have 50+ full-time employees or full-time equivalent have to provide “affordable” healthcare for their employees.

If an employer does not offer a healthcare plan to and has 50 or more full-time employees by definition, then the employer will have to pay a fine (tax penalty) of $2,000 per employee per year, after the 30th employee.

The ObamaCare fine (tax penalty) only applies to employers who hire U.S. citizens, thus hiring illegals saves the employer $2,000 per person per year. Thus, an employer who hires 500 illegals (undocumented workers) will save the company $1 Million per year.

ObamaCare puts U.S. citizens at a disadvantage over undocumented workers.

[9] ObamaCare Re-defines Full-time Work

The ObamaCare law also redefines what a full-time job is. In the past, a full-time job was 40-hours per week. Under ObamaCare, a full-time job is now 30-hours per week when averaged during a month (Source: U.S. Chamber of Commerce). Thus, ObamaCare gives incentives for employers have people work fewer hours. With a shorter work schedule, hourly-waged people will earn less money because of ObamaCare.

The people who are most affected are lower income and Middle-Class income workers.

[10] ObamaCare Helps EXPORT More U.S. Jobs

To avoid ObamaCare altogether, all an employer has to do is move their operations if they have 50 full-time people to Mexico, Canada, or to another “Free Trade Agreement” country. Under President Bill Clinton’s NAFTA, U.S. employers can set up shop in Canada or Mexico (and other locations); hire people for less wages, less regulations, and fewer lawsuits, then ship their products back to the USA without any import taxes or tariffs.

Since NAFTA was enacted in 1984, the Economic Policy Institute calculated that as of May 3, 2011, 682,900 American jobs have been displaced because of NAFTA. If ObamaCare becomes too much of a cost burden, business can move to countries where they are exempt from burdensome legislation, high taxes and penalties.

“And here’s what you need to know. First, I will not sign a plan that adds one dime to our deficits — either now or in the future. I will not sign it if it adds one dime to the deficit, now or in the future, period. And to prove that I’m serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don’t materialize.

— President Barack Obama said during his HealthCare speech before a Joint Session of Congress, 09-09-2009 (PDF, P7, highlight added)

[11] Deficit Soars Under ObamaCare

President Obama said in 2009 that the costs of ObamaCare would be about $900 Billion over 10 years. There have been five revisions to that original estimate where now the costs to taxpayers will add at least $2.6 Trillion over 2014-2013 (10-year period); that’s nearly a 300% increases in costs before the plan even got started.

According to a February 2013 GAO report, over the next 75 years, ObamaCare is expected to add (at least) $6.2 Trillion more to the deficit. If the original costs of ObamaCare have nearly tripled in the near term, what are the odds the costs are currently being grossly underestimated for the long-term?

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Further Reading.
Related Reports on ObamaCare:

Related Report on CPI – Inflation. How Gov Manipulates CPI

Graphic credits where noted and may be copyright by their respective owner.

Original article content, Copyright © 2013 NetAdvisor.org® All Rights Reserved.

Disclaimer: The information posted hereto is not to be deemed as tax, legal or financial advice. Always consult with the appropriate advisor for your particular situation.

NetAdvisor.org® is a non-profit organization providing public education and analysis primarily on the U.S. financial markets, personal finance and analysis with a transparent look into U.S. public policy. We also perform and report on financial investigations to help protect the public interest. Read More.

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