What exactly is Obamacare?

[Kelly_Bramble]

US citizens...

No, I am not making political statement, just sharing a summary of what "Obamacare" (Patient Protection and Affordable Care Act) is.

Credit: D Ba Kula

What people calls "Obamacare" is actually the Patient Protection and Affordable Care Act. However, people were calling it "Obamacare" before everyone even hammered out what it would be. It's a term mostly used by people who don't like the PPaACA, and it's become popularized in part because PPaACA is a really long and awkward name, even when you turn it into an acronym like that.

Anyway, the PPaACA made a bunch of new rules regarding health care, with the purpose of making health care more affordable for everyone. Opponents of the PPaACA, on the other hand, feel that the rules it makes take away too many... freedoms and force people (both individuals and businesses) to do things they shouldn't have to.

So what does it do? Well, here is everything, in the order of when it goes into effect (because some of it happens later than other parts of it):

Already in effect:
• It allows the Food and Drug Administration to approve more generic drugs (making for more competition in the market to drive down prices)
• It increases the rebates on drugs people get through Medicare (so drugs cost less)
• It establishes a non-profit group, that the government doesn't directly control, to study different kinds of treatments to see what works better and is the best use of money.
• It makes chain restaurants like McDonalds display how many calories are in all of their foods, so people can have an easier time making choices to eat healthy.
• It makes a "high-risk pool" for people with pre-existing conditions. Basically, this is a way to slowly ease into getting rid of "pre-existing conditions" altogether. For now, people who already have health issues that would be considered "pre-existing conditions" can still get insurance, but at different rates than people without them.
• It renews some old policies, and calls for the appointment of various positions.
• It creates a new 10% tax on indoor tanning booths.
• It says that health insurance companies can no longer tell customers that they won't get any more coverage because they have hit a "lifetime limit". Basically, if someone has paid for life insurance, that company can't tell that person that he's used that insurance too much throughout his life so they won't cover him any more. They can't do this for lifetime spending, and they're limited in how much they can do this for yearly spending.
• Kids can continue to be covered by their parents' health insurance until they're 26.
• No more "pre-existing conditions" for kids under the age of 19.
• Insurers have less ability to change the amount customers have to pay for their plans.
• People in a "Medicare Gap" get a rebate to make up for the extra money they would otherwise have to spend.
• Insurers can't just drop customers once they get sick.
• Insurers have to tell customers what they're spending money on. (Instead of just "administrative fee", they have to be more specific).
• Insurers need to have an appeals process for when they turn down a claim, so customers have some manner of recourse other than a lawsuit when they're turned down.
• New ways to stop fraud are created.
• Medicare extends to smaller hospitals.
• Medicare patients with chronic illnesses must be monitored more thoroughly.
• Reduces the costs for some companies that handle benefits for the elderly.
• A new website is made to give people insurance and health information.
• A credit program is made that will make it easier for business to invest in new ways to treat illness.
• A limit is placed on just how much of a percentage of the money an insurer makes can be profit, to make sure they're not price-gouging customers.
• A limit is placed on what type of insurance accounts can be used to pay for over-the-counter drugs without a prescription. Basically, your insurer isn't paying for the Aspirin you bought for that hangover.
• Employers need to list the benefits they provided to employees on their tax forms.


Starting: 8/1/2012
• Any health plans sold after this date must provide preventative care (mammograms, colonoscopies, etc.) without requiring any sort of co-pay or charge.

Starting: 1/1/2013
• If you make over $200,000 a year, your taxes go up a tiny bit (0.9%)

Starting:1/1/2014
This is when a lot of the really big changes happen.
• No more "pre-existing conditions". At all. People will be charged the same regardless of their medical history.
• If you can afford insurance but do not get it, you will be charged a fee. This is the "mandate" that people are talking about. Basically, it's a trade-off for the "pre-existing conditions" bit, saying that since insurers now have to cover you regardless of what you have, you can't just wait to buy insurance until you get sick. Otherwise no one would buy insurance until they needed it. You can opt not to get insurance, but you'll have to pay the fee instead, unless of course you're not buying insurance because you just can't afford it.
• Insurer's now can't do annual spending caps. Their customers can get as much health care in a given year as they need.
• Make it so more poor people can get Medicare by making the low-income cut-off higher.
• Small businesses get some tax credits for two years.
• Businesses with over 50 employees must offer health insurance to full-time employees, or pay a penalty.
• Limits how high of an annual deductible insurers can charge customers.
• Cut some Medicare spending
• Place a $2500 limit on tax-free spending on FSAs (accounts for medical spending). Basically, people using these accounts now have to pay taxes on any money over $2500 they put into them.
• Establish health insurance exchanges and rebates for the lower-class, basically making it so poor people can get some medical coverage.
• Congress and Congressional staff will only be offered the same insurance offered to people in the insurance exchanges, rather than Federal Insurance. Basically, we won't be footing their health care bills any more than any other American citizen.
• A new tax on pharmaceutical companies.
• A new tax on the purchase of medical devices.
• A new tax on insurance companies based on their market share. Basically, the more of the market they control, the more they'll get taxed.
• The amount you can deduct from your taxes for medical expenses increases.

Starting:1/1/2015
• Doctors' pay will be determined by the quality of their care, not how many people they treat.

Starting: 1/1/2017
• If any state can come up with their own plan, one which gives citizens the same level of care at the same price as the PPaACA, they can ask the Secretary of Health and Human Resources for permission to do their plan instead of the PPaACA. So if they can get the same results without, say, the mandate, they can be allowed to do so. Vermont , for example, has expressed a desire to just go straight to single-payer (in simple terms, everyone is covered, and medical expenses are paid by taxpayers).

Starting: 2018
• All health care plans must now cover preventative care (not just the new ones).
• A new tax on "Cadillac" health care plans (more expensive plans for rich people who want fancier coverage).

Starting: 2020
• The elimination of the "Medicare gap"


Opinion:


It is my view that the changes are more about how insurance companies do business with medical care consumers (you and me) than anything else. Perhaps we should have called it "Medical Insurance Reform Act" or MIRA. Ultimately for healthcare providers it is business as usual, however the law increases the medical insurance consumers access to medical care.

I think the biggest and only losers (it there are any) are the insurance companies.

[Kelly_Bramble]

References: Americans for Tax Reform, www.atr.org.

New Taxes associates with "Obamacare" (Patient Protection and Affordable Care Act):

PPaPCA contains 20 new or higher taxes that can be applied to selected earners and businesses. Arranged by their respective sizes according to CBO scores, below is the total list of an estimated $500 billion-plus in tax increases (over the next ten years) in Obamacare, their effective dates, and where to find them in the bill.

All numbers are estimates by the "Americans for Tax Reform". It is likely these dollar values put forth are as high as can be estimate and then more.

Surtax on Investment Income (Takes effect Jan. 2013): A new, 3.8 percent surtax on investment income earned in households making at least $250,000 ($200,000 single). This would result in the following top tax rates on investment income:


This would result in the following top tax rates on investment income:

	Captital Gains	Dividends	Other
2012	15%	15%	35%
2013	23.8%	43.4%	43.4%

*Other unearned income includes (for surtax purposes) gross income from interest, annuities, royalties, net rents, and passive income in partnerships and Subchapter-S corporations. It does not include municipal bond interest or life insurance proceeds, since those do not add to gross income. It does not include active trade or business income, fair market value sales of ownership in pass-through entities, or distributions from retirement plans. The 3.8% surtax does not apply to non-resident aliens. (Bill: Reconciliation Act; Page: 87-93)

Medicare Payroll Tax (Takes effect Jan. 2013): Current law and changes:

	First $200,000 ($250,000 Married) Employer/Employee	All Remaining Wages Employer/Employee
Current Law	1.45%/1.45% 2.9% self-employed	1.45%/1.45% 2.9% self-employed
Obamacare Tax Hike	1.45%/1.45% 2.9% self-employed	1.45%/2.35% 3.8% self-employed

Bill: PPACA, Reconciliation Act; Page: 2000-2003; 87-93

Individual Mandate Excise Tax and Employer Mandate Tax (Both taxes take effect Jan. 2014):

Individual: Anyone whom can afford “qualifying” health insurance and yet not buying as defined by PPaPCA must pay an income surtax according to the higher of the following

	1 Adult	2 Adults	3+ Adults
2014	1% AGI/$95	1% AGI/$190	1% AGI/$285
2015	2% AGI/$325	2% AGI/$650	2% AGI/$975
2016 and beyond	2.5% AGI/$695	2.5% AGI/$1390	2.5% AGI/$2085

Exemptions for religious objectors, undocumented immigrants, prisoners, those earning less than the poverty line, members of Indian tribes, and hardship cases (determined by HHS). Bill: PPACA; Page: 317-337

Employer: If an employer does not offer health coverage, and at least one employee qualifies for a health tax credit, the employer must pay an additional non-deductible tax of $2000 for all full-time employees. Applies to all employers with 50 or more employees. If any employee actually receives coverage through the exchange, the penalty on the employer for that employee rises to $3000. If the employer requires a waiting period to enroll in coverage of 30-60 days, there is a $400 tax per employee ($600 if the period is 60 days or longer). Bill: PPACA; Page: 345-346

(Combined score of individual and employer mandate tax penalty: $65 billion)


Tax on Health Insurers (Takes effect Jan. 2014): Annual tax on the industry imposed relative to health insurance premiums collected that year. Phases in gradually until 2018. Fully-imposed on firms with $50 million in profits. Bill: PPACA; Page: 1,986-1,993

Excise Tax on Comprehensive Health Insurance Plans (Takes effect Jan. 2018): Starting in 2018, new 40 percent excise tax on “Cadillac” health insurance plans ($10,200 single/$27,500 family). Higher threshold ($11,500 single/$29,450 family) for early retirees and high-risk professions. CPI +1 percentage point indexed. Bill: PPACA; Page: 1,941-1,956

“Black liquor” tax hike (Took effect in 2010) This is a tax increase on a type of bio-fuel. Bill: Reconciliation Act; Page: 105

Tax on Innovator Drug Companies (Took effect in 2010): $2.3 billion annual tax on the industry imposed relative to share of sales made that year. Bill: PPACA; Page: 1,971-1,980

Tax on Medical Device Manufacturers (Takes effect Jan. 2013): Medical device manufacturers employ 360,000 people in 6000 plants across the country. This law imposes a new 2.3% excise tax. Exempts items retailing for <$100. Bill: PPACA; Page: 1,980-1,986

High Medical Bills Tax (Takes effect Jan 1. 2013): Currently, those facing high medical expenses are allowed a deduction for medical expenses to the extent that those expenses exceed 7.5 percent of adjusted gross income (AGI). The new provision imposes a threshold of 10 percent of AGI. Waived for 65+ taxpayers in 2013-2016 only. Bill: PPACA; Page: 1,994-1,995

Flexible Spending Account Cap – aka “Special Needs Kids Tax” (Takes effect Jan. 2013): Imposes cap on FSAs of $2500 (now unlimited). Indexed to inflation after 2013. There is one group of FSA owners for whom this new cap will be particularly cruel and onerous: parents of special needs children. There are thousands of families with special needs children in the United States, and many of them use FSAs to pay for special needs education. Tuition rates at one leading school that teaches special needs children in Washington, D.C. (National Child Research Center) can easily exceed $14,000 per year. Under tax rules, FSA dollars can be used to pay for this type of special needs education. Bill: PPACA; Page: 2,388-2,389

Medicine Cabinet Tax (Took effect Jan. 2011): Americans no longer able to use health savings account (HSA), flexible spending account (FSA), or health reimbursement (HRA) pre-tax dollars to purchase non-prescription, over-the-counter medicines (except insulin). Bill: PPACA; Page: 1,957-1,959

Elimination of tax deduction for employer-provided retirement Rx drug coverage in coordination with Medicare Part D (Takes effect Jan. 2013) Bill: PPACA; Page: 1,994

Codification of the “economic substance doctrine” (Took effect in 2010): This provision allows the IRS to disallow completely-legal tax deductions and other legal tax-minimizing plans just because the IRS deems that the action lacks “substance” and is merely intended to reduce taxes owed. Bill: Reconciliation Act; Page: 108-113

Tax on Indoor Tanning Services (Took effect July 1, 2010): New 10 percent excise tax on Americans using indoor tanning salons. Bill: PPACA; Page: 2,397-2,399

HSA Withdrawal Tax Hike (Took effect Jan. 2011): Increases additional tax on non-medical early withdrawals from an HSA from 10 to 20 percent, disadvantaging them relative to IRAs and other tax-advantaged accounts, which remain at 10 percent. Bill: PPACA; Page: 1,959

$500,000 Annual Executive Compensation Limit for Health Insurance Executives (Takes effect Jan. 2013): Bill: PPACA; Page: 1,995-2,000

Blue Cross/Blue Shield Tax Hike (Took effect in 2010): The special tax deduction in current law for Blue Cross/Blue Shield companies would only be allowed if 85 percent or more of premium revenues are spent on clinical services. Bill: PPACA; Page: 2,004

Excise Tax on Charitable Hospitals (Took effect in 2010): $50,000 per hospital if they fail to meet new "community health assessment needs," "financial assistance," and "billing and collection" rules set by HHS. Bill: PPACA; Page: 1,961-1,971

Employer Reporting of Insurance on W-2 (Took effect in Jan. 2012): Preamble to taxing health benefits on individual tax returns. Bill: PPACA; Page: 1,957