The Obamacare Taxman Cometh (Again)



About half of the cost of paying for Obamacare comes from new taxes. Some of those were already in effect before this year, but some of them are kick in for the first time this tax season. 

The latest and greatest Affordable Care Act revenue raisers include an excise tax on medical devices, an increase in the Medicare payroll tax from 2.8 to 3.8 percent for couples earning more than $250,000 annually, and limits on flexible spending accounts.

This chart from the Heritage Foundation is slightly older, so its totals aren't quite up to the minute, but it gives you an idea of the tax hikes included in the law, the dates they go into effect, and the amount of revenue they are expected to raise. 

Heritage Foundation

As you can see, the new taxes don't end this year. There's still the "Cadillac tax" off in 2018, and the individual mandate penalty which the Internal Revenue Service will start assessing in 2014. As Sam Baker reports in National Journal, next year is when things really start to get interesting:

Next year's filing will be the first time the Internal Revenue Service enforces the law's individual mandate, which requires most taxpayers to either buy insurance or pay a penalty. There are several exemptions, including a waiver for people who can't afford insurance.

Once the next filing season rolls around, most Americans will have to do one of three things: prove they had insurance; prove they qualified for an exemption; or pay a penalty—$95 or 1 percent of their income, whichever is higher.

People who received tax credits to cover part of their premiums will need to make sure the amount they received lines up with how much they should have gotten based on their actual income.

"Right now [the subsidy] is based on a forecast of their income; next year will be checking the forecast against reality," said Mitchell Fox, director of product management at TurboTax. "That refund could go up or it could go down."

President Obama is already getting in on the fun. He paid $2,310 in Obamacare-related taxes for 2013

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  1. Obamacare Wins U.S. Bond Converts as Slowing Costs Tame CPI

    After doubling in the past two decades, medical expenses rose less last year than at any time since Harry S. Truman was president in 1949, helped by Medicare reimbursement cuts. The rollout of President Barack Obama’s signature 2010 law will hold down consumer prices for years to come as millions of Americans obtain coverage under the Patient Protection and Affordable Care Act, BNP Paribas SA and Credit Suisse Group AG said.

    The CBO and the Joint Committee on Taxation estimate the law will produce $206 billion in savings over the next 10 years and more than $1 trillion over the next two decades.

    “The ACA is a very important driver” of lower prices and is helping create disinflationary expectations, Carlos Pro, New York-based interest-rate strategist at primary dealer Credit Suisse Group AG, said by telephone on April 9. Health-care costs and Obamacare have been one of the main themes of Pro’s discussions with clients since July.


    1. Obamacare must have time-traveled too, since healthcare inflation has been decreasing since around 2008.

      The CBO and the Joint Committee on Taxation estimate the law will produce $206 billion in savings over the next 10 years and more than $1 trillion over the next two decades.

      Bwahahaha. And Medicare was supposed to cost about 10% of what it does now.

    2. How much are premiums going up next year? 8%?

    3. And why an interest rate strategist should have deep knowledge of the health care business, well, its not clear to me.

      Lets ask a real expert:

      A recent survey of 148 insurance brokers shows that ObamaCare is sending premiums rising at the fastest clip in decades.


      What’s going on here? Well, health care is part of the bigger economy. When the economy is notably weak for years on end, as it has been under Obama, health care costs are suppressed just like anything else. OCare appears to be overriding that secular downward pressure now that it is (more or less) fully in effect.

      1. well, it’s Fox. Come on, RC. They’re just a tentacle of the Kochtopus, wishing to see The Obama fail.

      2. My premiums are up somewhere around 20% over the last two years, and my deductibles doubled this year. Bless you, Democrats!

    4. Here’s a big reason why it’s going to cost less:

      “The savings come about mostly because insurance companies have redesigned plans on the government-run exchanges to shave costs, narrowing networks of doctors and lowering reimbursement rates, The Journal noted.”

      CBO: Obamacare Costs Will Be Lower Than Projected

      Higher deductibles (I just increased mine to $10K to offset the 12% premium hike), fewer choices, and paying doctors less so Obamacare doesn’t cost as much as originally estimated. Big deal.

      It still raises taxes, takes away choice, freedom and jobs, erodes competition. Instead they could have reformed the FDA, AMA and the insurance industry to allow for more competition.

      1. True Classical Liberals like shriek believe that health insurance is too important to leave to the market.

    5. If those stats are comprehensive (and there are good reasons to question that*), then it’s because of Medicare cost cutting and forcing more people to bear more of their own costs out of pocket.

      I doubt you’ll find many libertarians here who are opposed to cutting Medicare or making the healthcare system more consumer driven.

      Problem is that these things are shell games, unintended consequences, and unsustainable with ObamaCare.

      Because of demographic trends, I don’t think anybody expects the growth of Medicare costs to stay lower for long.

      And the kind of consumer driven costs people are being forced to carry in that Deloitte study I linked below are an unintended consequence of ObamaCare. If more people are forced to self-treat their symptoms through over the counter remedies–because of rationing–are you going to celebrate those cost savings, too?

      I know how to keep heretical costs down! Let’s force the cancellation of millions of people’s plans, make people sign up for plans with much higher deductibles, and when they’re forced to self-medicate, we’ll count that as healthcare cost savings!

      And remember, kids, this is all to help the working poor.


      1. “I know how to keep heretical [healthcare] costs down!”


        Damn spellchecker and its Freudian slips!

      2. “The average individual deductible for what is called a bronze plan on the exchange?the lowest-priced coverage?is $5,081 a year, according to a new report on insurance offerings in 34 of the 36 states that rely on the federally run online marketplace.

        That is 42% higher than the average deductible of $3,589 for an individually purchased plan in 2013″


        1. Premiums are down 20% though (Deloitte or PriceWaterhouse = source)

          1. Yeah, it’s easy to do that when you’re making your average sick person pay through the nose to the tune of thousands more per year before they get anything out of the insurance company!

            The idea that you can pay lower premiums but with a higher deductible isn’t new to you, is it? It works that way in auto insurance, too.

          2. They are only down 20% when you compare the average bronze Obamacare plan to the average of all employer plans.

          3. Was making sick people pay thousands more out of pocket when they get sick a stated feature of ObamaCare?

            Of is that just a bonus!

            People are going to be so happy to learn that they can’t afford healthcare–even when they have insurance!

            Thanks Obama! You make everything precious in your own way.

            1. Don’t you know Ken? Health insurance == health care.


              1. It’s like Shrike has devoted his life to proving, somehow, that market forces are a hoax.

                His thinking, it’s dumber than creationism. I know bible-thumping creationists who are smarter than Shrike.

      3. Well, medicare cost cutting (or any cost cutting) is usually a good thing since our health care is much more expensive than need be.

        And forcing people to pay up? That’s the “skin in the game” that “Reason” and others have been championing for years…maybe decades!

        These are both good things, as is the ACA…at least in comparison to the GOP or Libertarian “let ’em suffer and be preyed upon” plans.

        I paid extra ACA tax this year and am glad to do so since I had a very good year. Those are the breaks. I get to keep the rest….and I already have plenty of roofs over my heads and plenty of cars, boats and IRA’s……

        So, count me in as enjoying to pay for others….I don’t mind. That’s part of what a commonwealth and country are all about.

        1. “And forcing people to pay up? That’s the “skin in the game” that “Reason” and others have been championing for years…maybe decades!”

          Talk about putting lipstick on a pig!

          You haven’t made people pay up–you’ve taken people who used to have lower deductibles, and you’ve deprived them of the benefit of insurance coverage–which they would have had without ObamaCare.

          How does forcing people, when they get sick, to pay thousands more out of pocket equate to more coverage or a better healthcare system? ObamaCare was meant to make healthcare more affordable for the working poor, not to push the deductibles so high that the working poor can’t afford healthcare–even now that they “have” insurance!

          And as far as Medicare cuts go, like I said, those are incidental, not expected to last, and are, basically, unrelated to ObamaCare.

          If you want to cut Medicare, why lump that in with ObamaCare? Just cut Medicare. That’s all it takes. You won’t get any argument from any libertarians on that.

          The problem isn’t cutting Medicare. The problem is ObamaCare.

        2. “I paid extra ACA tax this year and am glad to do so since I had a very good year.”

          If you want to pay extra in taxes, feel free to do so. There’s no harm in people like you doing things voluntarily.

          Here’s a website that lets you do exactly that:


          Send the IRS all the money you want whether you owe it or not!

          The problem is using the government to force other people to do things they don’t want to do. You understand that, right? Like the government shouldn’t force everyone to go to church–just because, maybe, you like to go to church?

          You give people worse healthcare than they had before, and you’re giving them higher deductibles than they had before–and you’re forcing them to buy insurance, and you’re forcing them to pay higher taxes for it, too?

          And that’s supposed to be okay because YOU don’t mind paying extra?!

          You sound like some kind of homophobic bigot who opposes gay marriage–because he’s not gay. I mean, do you extend your logic to other situations, or are your intolerant views limited to healthcare?

        3. “So, count me in as enjoying to pay for others….I don’t mind. That’s part of what a commonwealth and country are all about.”

          I care more about myself than I do about you.

          Seriously, I’m not here for your benefit.

          I have no interest in being part of your “commonwealth”. I love this country because of the constitution–and the way it protects me and my rights from people like you.

          That’s the purpose of government. To protect our rights–sometimes from people like you.

    6. Because everyone knows that when you cut prices, costs go down! See 1970s Price Controls (hint: price is not the same as cost).

  2. its totals aren’t quite up to the minute

    That’s OK, Peter. *Nobody* knows what the “correct” totals are.

  3. The latest and greatest Affordable Care Act revenue raisers include … limits on flexible spending accounts.

    Thanks, Obama! Way to “improve” my healthcare plan!

    As for you, Pete, this isn’t baseball. Knocking it out of the park once and striking out once is still a failure for alt-text.

  4. Looks like someone came up with the perfect Cracker tax on with that 10% tax on indoor tanning.

  5. Hey, remember this one?

    Speaking in Dover, New Hampshire on Sept. 12, 2008, candidate Obama said:

    “I can make a firm pledge. Under my plan, no family making less than $250,000 a year will see any form of tax increase. Not your income tax, not your payroll tax, not your capital gains taxes, not any of your taxes.”


    Down the memory hole, I guess. C’mon, Reason, no article on OCare should lack a reminder of this one. And before people start quibbling that the individual mandate isn’t a tax, SCOTUS begs to differ.

    1. “Read my teleprompter’s lips”

    2. And before people start quibbling that the individual mandate isn’t a tax, SCOTUS begs to differ.

      But Obama doesn’t (starting only the second after the decision was finalized and Obamacare was safe).

    1. Kill Miley Cyrus on live television?

  6. You know what’s really awesome? Because my wife’s insurance got canned, she’s now “making” more than she did last year (never mind that her entire paycheck goes to insurance now). And of course last years income is what they used to determine how much subsidy you got. I’m sooo looking forward to getting fucked in the ass this time next year because they decide that we shouldn’t have gotten as big a subsidy as we did (even though it’s not all that great to begin with).

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