Hey Hillary, No Middle Class Tax Hike? What About Obamacare?

Hillary says that she won’t raise taxes on American families making less than $250,000. Furthermore, she indicates that she wants to retain the Affordable Care Act while tweaking it to make it work. Sounds good in theory; however, there’s one point that is missed: Obamacare is already a tax that is disproportionately impacting middle class Americans. It’s actually several taxes rolled in to one.

First, there is a tax if you choose to opt out of Obamacare. That’s called the individual mandate (tends to be a middle class tax). Then, there’s the employer mandate. Both are taxes that are applied if you don’t play ball as you’re expected to with regard to Obamacare. One of the dynamics that the government didn’t expect: many of the young workers are opting to pay the penalty (why not, you can jump in without any pre-existing condition?) instead of gaining coverage. The original models relied upon having a large block of healthy youth funding the program for the benefit of those who needed to be subsidized. Ooops! If the young and healthy aren’t signing up, take one guess who is: it’s those with the highest medical costs. That’s the reason why United Healthcare left 34 state marketplaces. It’s the reason why 16 out of 23 state exchanges have failed. It’s the reason why counties with a single marketplace insurer are expected to rise from 7% this year to 31% next year.

Next, one needs to keep in mind that premiums have increased dramatically. Mine have gone from about $800 per month to north of $2,000+ per month since Obamacare has been introduced. The premium impact is something I can’t avoid, based on a mandated government program….therefore, I consider that to be a tax. These rising premiums impact those who are the subsidizers (the middle class).

Above and beyond the rising premiums, the patient out-of-pocket obligations have soared, shouldering the burden squarely upon the consumer (inclusive of the middle class). My PCP and specialist copays have tripled and that’s just the tip of the iceberg. Premiums are up and coverage limits are vastly reduced. That’s a double tax whammy. Doesn’t make sense? Let me explain it like this: let’s assume that you have a 2,500 square foot home and your property taxes are $5,000 per year. If the tax assessor in your area increased your taxes to $7,500 and then knocked down half of the square footage of your home so that you could no longer use it…that’s the equivalent of Obamacare: higher front end costs and much less utility. Folks don’t seem to see much higher premiums with much less benefits as double taxation; I do…and it predominantly impacts the middle class. Those are two of the hidden taxes. Other taxes are not hidden; but, are much less known.

I build and sell companies for a living. Prior to the advent of Obamacare, the capital gains tax was at 15%. Obama then pushed it to 20%; but wait: that 20% is really 23.8% (58.7% tax change). How can that be? There was a provision added to Obamacare, the Net Investment Income Tax, that taps in to capital gains over a certain level and taxes them at 3.8%. Admittedly, this piece does not generally impact a lot of folks; but it’s out there. That being said, what do my investment gains have to do with healthcare? Naturally, the answer is nothing; however, remember the old, “You have to pass the bill to find out what’s in it” statement? This is one of many things that’s buried in Obamacare. Those who go to tanning booths saw the 10% tax there associated with Obamacare (insert your Trump joke here). Noticed your drug costs going up? Well, there’s a tax on brand name drugs. Have a “high end” healthcare plan (that’s kind of an oxymoron) and you’ll find a 40% Cadillac plan tax coming in 2018. Heck, they even rolled out a 2.3% tax on medical devices in the original plan (that tax has since been put on hold).

Peel back the layers of the onion and you’ll see that the “Affordable” Care Act contains tax after tax after tax (I have only scratched the surface with the aforementioned examples). To say that there will not be middle class tax hikes and to also say that Obamacare should stay as it is, with moderate tweaks, is to talk out both sides of your mouth. It’s the election equivalent of “you need to pass the bill to see what’s in it.” In this instance, “you simply need to elect the candidate to see the magical incremental fixes.” Sleep well, knowing that the folks who created this debacle, this bevy of buried taxation, are also the folks best qualified to fix it.