by David Tesitor
HUERFANO COUNTY — Since the Supreme Court upheld the Affordable Care Act (ACA), otherwise known as Obamacare, the long term effects are coming to light. Exactly what does this mean to the general population of residents of Huerfano County? We will explore three areas.
The first area concerns the tax implications. While most of the population of the county falls below the federal minimum wage average, the taxes will apply to all. Middle and low income tax payers will see the effects on their wages and income taxes. While the ACA was not validated under the commerce clause, the part of the Constitution which grants Congress the power to regulate commerce among the states, the Supreme Court has ruled the mandate is constitutional under the government’s power to tax the population. Individuals will be required to purchase health insurance, either privately or through insurance exchanges set up by each state or face the risk of paying a financial penalty.
Part of the increase in taxes will come from the Medicare payroll tax which employers and employees share. Right now, that tax is 2.9%. In 2013, the rate will increase by 0.9% per employee for salary or self-employed income above $200, 000 for an unmarried person, above $250,000 for a married couple filing jointly, and above $125,000 for married filing single persons. The above is taken from Smart Money. (SmartMoney.com, “What Obamacare Means for Your Taxes,” by Bischoff on June 28, 2012)
According to a newsletter published on April 14, 2010 by The Heritage Foundation, “Combined, all of these tax increases (including those on employers that do not provide health insurance for their employees and those who do not buy health insurance) will cost taxpayers $503 billion dollars between 2010 and 2019.” The Heritage Foundation bases this assertion on a 2010 release by the Congressional Budget Office and Joint Committee on Taxation, (“Estimated Revenue Effects Of The Amendment in the Nature of a Substitute to HR 4872,
Those who choose to purchase high end Cadillac plans costing more than $10,200 single/$ 27,500 for families, will pay a 40% excise tax. Granted, not many residents of Huerfano County can afford the full plans. However, expected increases in premiums, may eventually result in some older people coming close to that level of premium. The one tax affecting most people will be the increase of the Part B premium for beneficiaries age 65 and over.
The ACA allows individuals freedom of choice with their doctors, treatment plan and level of care however health care coverage is required or the individual must pay a penalty. Individuals may choose private insurance plans through exchanges, marketplaces for insurance shopping which will be set up by each state. The ACA endeavors to solve the problems with our current health care system: many are uninsured and many are uninsurable because of preexisting conditions.
However, Coloradoans already have attempted to solve these problems. Colorado has long had a guaranteed issue pool, called Cover Colorado for the uninsurable. If you own a group or private insurance plan in Colorado, you are already paying $4.15 per month into the CoverColorado pool. CoverColorado will take anyone, including those with preexisting conditions. It is not a low income plan, but premiums are now determined based on income.
The ACA states insurance costs and premiums will go down in the long term under the plan, but because of the mandates, premiums are currently beginning to increase because of the following provisions. Employer plans must cover dependent children until they are age 26; everyone, including single males, must have maternity coverage; younger insureds will pay more for the older population and insurance companies must allocate 80 percent of their collected premiums into the claims pool, leaving them the remainder of 20% to operate all administrative costs. This action has already forced companies to increase premiums across the board just to stay even.
There are many advantages including preventive care, but services could be limited unless you choose to pay for private care and pay the premium.
Another area concerns the area’s largest employers, those with over 50 employees. Presently, they could choose to opt out from providing coverage and pay the penalty which presently is lower than the cost of most low end insurance plans, forcing insureds into individual or exchange plans. According to a June 2012 article in the Wall Street Journal, these large employers will still have to hire additional human resources personnel just to administer the plan whether or not they opt out.
The final area to address here is the impact of the law on Medicare and Medicaid reimbursements. The bill proposes to cut Medicare benefits which would have a major impact on Huerfano Countys elderly. The exact Medicare cuts will not be known until 2014 when the plan is fully implemented. Take for example the Prescription Part D drug plans. Three years ago, many drugs which were formulary drugs on many companies’ lists are not being covered today. This forces patients into less expensive, usually generic prescriptions.
It remains unclear what the final tax and financial impact for businesses and their ability to provide goods and services to the consumers. In order to remain competitive and to stay afloat, businesses may need either raise prices, cut costs (which will likely be to reduce the numbers of employees) or not invest their profits back into the economy.
The reality is the law is with us for now and businesses need to figure out a way to deal with the taxation imposed on their trade to help pay for the Act. As discussed last week, the hospital is already predicting reductions in their reimbursements from Medicare, Medicaid and their uncollected receivables.
Whether or not one chooses to remain uninsured for whatever reason, it soon will be time to pay the piper. One may agree or disagree with the recent Supreme Court decision, applaud the law or simply protest government intervention, this law is with us and we must adhere to it.