Happy New Year from the U.S. government. Now, empty your pockets. We have to give your money to someone else.
On Jan. 1, the Affordable Care Act's coverage law went into effect, requiring a slew of new Obamacare taxes, fines, and fees to finance hundreds of billions in costs the government requires to operate the program.
Those who fail to comply will receive a tax on their annual IRS bill, while a greater share of Americans who do comply will experience higher premiums and significant changes to their previous coverage.
Welcome to the Dark Side of the Affordable Care Act, the part where we actually have to pay for all those great benefits we've been hearing about for more than three years.
The new healthcare law has noble intentions, but essentially boils down to a massive redistribution scheme that lines the pockets of insurance companies in part by using the threat of a steep annual fine (or Obamacare tax, if you believe the Supreme Court).
It also drives up premiums, redistributes middle-class wealth to the uninsured, and fails to achieve what should have been the primary goal of healthcare reform: Better, more affordable care for everyone.
In fact, for many Americans, the combination of new Obamacare taxes will make healthcare less affordable this year.
New Obamacare Taxes You Can Expect in 2014
Here are the major new Obamacare taxes, fines, and fees that Americans will get saddled with in the New Year:
- The Big Tax-Kahuna: The most notable fine centers on the individual mandate, the rule that orders every American to purchase health insurance or else pay a fine to the IRS. Those who fail to purchase insurance by April 1 - and don't belong to a union or other entities that have received exemptions from the law - will need to pay a fine. For a law that was passed with "fairness" as a central tenet, this law is anything but fair. The fine for noncompliance in 2014 will be $95, or 1% of household income, whichever is higher. For a person earning $50,000 a year, this fine amounts to $500, which may not be enough to deter many people from buying insurance since rates and premiums have risen substantially across the country.
- The Higher Premium Fee: Another big new Obamacare "tax" is in fact its largest source of revenue, an annual fee on health insurers. This fee will produce $8 billion for the government in 2014 and a little less than $100 billion by the end of 2020. Naturally, these fees are being passed on to the customer in the form of higher premiums.
- The Nickel-and-Dime Fee: Just to prove that the government is always nickel-and-diming, individual and group health insurers must now pay a small fee to fund a Patient-Centered Outcomes Research Institute, which will engage in a variety of sociological and economic studies aimed to reduce long-term costs. It's a modest $2 per insured customer this year and will increase every year according to inflation. No doubt, this fee will also be passed on to customers.
- The Temporary-Then-Permanent Fee: In the category of temporary Obamacare taxes that could easily become permanent, health insurers face a "reinsurance" fee to help offset the costs of taking on patients with preexisting conditions who purchased coverage on the federal exchanges. The fee will be $63 per enrollee and is expected to raise about $25 billion over three years. The government argues this particular Obamacare tax will no longer be needed at that point. But even if that's true, the government may decide it needs to keep the tax to help finance some other aspect of Obamacare that is costing more than expected.
- The Out-of-Thin-Air Obamacare Tax: Recently, the Department of Health and Human Services proposed charging a 3.5% monthly fee on policy premiums purchased on the federal exchange (healthcare.gov). So, all those customers with preexisting conditions will still end up with higher healthcare costs, as the government adds more new fees and fines to the mix.
This entire healthcare law is a "fly-by-the-seat-of-my-pants" experiment in economic fascism, with a government that struggles to manage itself telling private industry what to do and how to do it.
Worse still, a national bailout of insurance companies may be inevitable due to the misallocation of time and energy that went into this law, and the downright lies told in order to enact it. We fully expect that the solution to this healthcare boondoggle ultimately will be even greater control by the government in the future.
In fact, it's already started.
The Only Thing Worse Than New Obamacare Taxes Is...
Just days ago in the Money Map Dispatch, we predicted that the term "single-payer" would be an important keyword for 2014. We argued that supporters of government healthcare would abandon Obamacare and its failures and throw their support behind their real desired end goal - universal healthcare by the end of 2014.
In a column in The New York Times last week,liberal stalwart and filmmaker Michael Moore demanded more government intervention in the healthcare markets, calling for - you guessed it - universal healthcare. How we'll pay for it isn't clear, but rationed-care, government control, and increased cronyism are hallmarks of universal programs around the world.
Yes, universal single-payer care is the end goal, and that will requires even more money - your money - to make it happen.
When the Obamacare train wreck runs off the rails due to its own poor design, be prepared for increased calls for more government intervention in your healthcare. The only thing worse than health insurance companies operating for-profit is the belief that the U.S. government can run anything more efficiently and effectively than the private sector.
If you thought paying a bunch of new Obamacare taxes was bad, wait until the government hits you with taxes to fund a single-payer system.
Unfortunately, our politicians see only a black-and-white choice between these two options when it comes to healthcare. But there are better solutions. If only we had politicians who could truly think outside the box, free from the influence of union or lobbyist money...
Editor's Note: Keep in mind, no matter how Obamacare affects your health, your wallet, or your politics, there is always a bright side when it comes to investing. We've found a way to profit from the changes taking place in our nation's healthcare sector. You can get started here.