Thursday, October 24, 2013

Who Pays for These Obamacare Federal Subsidies?

How many times have we read or heard about federal government subsidies for those who are lucky enough to qualify in the Obamacare exchanges.  Newspaper editors, columnist and talking heads all claim that “affordable” health care is on the way for those below the poverty line and the chronically infirmed.  But where do these”subsidies” actually come from.  Who is actually paying for this monstrosity?  Carolina Journal outlined the following:

Individual Mandate — This provision of the law is not a penalty, but a tax. The Obama administration euphemizes the individual mandate as the “individual shared responsibility provision.” If an uninsured individual does not purchase health insurance between now and February 2014, that person will face a tax of either $95 or 1 percent of income, whichever is greater.

Employer Mandate — Also referred to by the Obama administration as the “
employer shared responsibility payment,” employers with 50 or more full-time workers (30 hours/week) must provide affordable, qualified health insurance for their workers. If not, an employee who obtains subsidized coverage on the exchange triggers a tax on the employer.

Large employers may be subject to 
two penalties under the employer mandate,one strong and one weak. The ultimate smack-down penalty is a $2,000 fine per worker for every worker after the 30th employee if an employer does not provide any health benefits. Meanwhile, the slap-on-the-wrist penalty occurs when an employer does offer coverage, but the firm either does not cover 60 percent of the employee’s costs or requires the employee to pay a contribution that exceeds 9.5 percent of his income. In these situations, an employer is fined $3,000 per worker, but only for those who choose to purchase subsidized private coverage on the health insurance marketplace.

Reinsurance Tax — The reinsurance tax applies to any company that provides health insurance (big businesses, labor unions, insurance carriers). It is a $63 fee assessed on not just every worker or individual, but dependents as well. Because of this, The Wall Street Journal refers to the “reinsurance tax” as the “
belly-button tax.”

The reinsurance tax has a lifespan of three years and is supposed to kick in at the start of the new year. The majority of the estimated total of $25 billion it will raise will be designated as a fund for individual insurers to offset the cost of high-risk individual policyholders both on and off the exchanges. It will also serve as a pain reliever for these insurance companies when 
young and healthy invincibles refuse to sign up for costly health plans.

High-risk individual policyholders will therefore benefit at the extra expense of those who 
do not even participate in the individual marketplace, such as small businesses, large businesses, and the self-insured.

Health Insurance Tax — Unlike the Patient Protection and Affordable Care Act, HIT will live up to its name, in which consumers will take a direct one to the wallet. The tax kicks off in 2014, when insurers catering to the individual and small group markets will have to pay an annual fee to the federal government.

And what they can’t tax, the Federal Reserve will print or digitize.  This law is not economically sound.  Either Obamacare will fail, or the country will.  Something has to give.

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