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Obamacare will cost you your retirement

President Obama’s tax pledge, which he made as a candidate, couldn’t have been any clearer: “Under my plan, no family making less than $250,000 will see their taxes increase — not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes.”

He even went further than that. He promised that he would lower taxes for just about all of us. “I will cut taxes … for 95 percent of all working Americans.”

The president broke both these promises as soon as he signed Obamacare into law. In one speech, Obama talked about the dangers of new taxes because health care costs are already out of control — and he promised to ease our tax burden. Obamacare was supposed to make health care cheaper for all of us.

Instead, it’s going to drive up the price of everything from tax bills to wheelchairs. When you add it all up, Obamacare will bring about the biggest tax increase in our country’s history — $569 billion over the next decade.

How Obamacare will affect you
Starting in 2013, individuals with incomes over $200,000 a year and families making more than $250,000 will see [a] payroll tax rise from 1.45 to 2.35 percent. That’s a single tax increase of more than 60 percent.

Also in 2013, individuals and families earning more than $200,000 and $250,000, respectively, will face a new 3.8 percent Medicare tax on “unearned” income, such as interest, capital gains, annuities, royalties, rents and dividends. This new Medicare tax is estimated to enrich the government by $210 billion from 2013 to 2019.

It’s supposed to be a tax on the rich, but a lot of not-so-wealthy Americans will end up paying it as well, because many will eventually sell a home. Under Obamacare, if the profit earned on any home sale exceeds the capital gains exemption of $250,000 for an individual or $500,000 for a family, the excess amount will be subject to the new Medicare tax, in addition to capital gains taxes.

Unfortunately, this will amount to a new tax on retirement savings because so many Americans rely on the long-term appreciation of their homes to help fund their nest eggs.

Even worse, none of these taxes is indexed to inflation. So as incomes rise — as they invariably do over time — more and more people will be subjected to these so-called taxes on the wealthy.

Twenty years from now, a person earning $200,000 would be the equivalent of a person earning $92,000 today, assuming 4 percent inflation. Within 30 years, the tax would hit people earning today’s equivalent of $62,000. And in 50 years, this “high-roller” tax would kick in at today’s equivalent of $29,000.

These taxes will be waiting for you, your children and your grandchildren.

People whose employers offer them top-of-the-line health insurance will be penalized for the privilege. In 2018, so-called gold-plated Cadillac plans will be subject to a whopping 40 percent excise tax.

The tax will ensnare employer-sponsored policies with premiums higher than $10,200 for individuals and $27,500 for families. This hefty new tax is expected to bring the government $32 billion in just the first two years.

This tax, like so many other Obamacare taxes, won’t be adjusted for inflation. It might take 10, 20 or even 30 years, but sooner or later, every employer-sponsored policy will be subject to this 40 percent tax.

Making matters worse, the cost of health insurance tends to rise faster than income. The Kaiser Family Foundation found that from 1999 to 2009, overall inflation was 28 percent. Earnings rose 38 percent. But health insurance premiums rose a whopping 131 percent.

If premiums continue rising at this pace, it will take only a few years before the average plan is deemed a Cadillac plan under the law.

Seniors will suffer under Obamacare
According to the Congressional Budget Office, Obamacare will cost at least $938 billion over the next decade. So here’s the big question: Who is going to pay for it? The answer is … drum roll please … senior citizens.

As it turns out, more than half this bill will be covered through cuts in Medicare spending.

Medicare affects an enormous portion of the population. In 2008, it covered more than 45 million Americans. Roughly 38 million of them were 65 or older. The other 7 million were disabled.

All told, the president’s health care bill will cut Medicare by $575 billion over 10 years, according to the Centers for Medicare and Medicaid Services. Seniors and the disabled are going to see their costs rise and their quality of care suffer.

Medicare is an expensive program, and it could certainly benefit from some streamlining. In fact, Medicare fraud has grown into a $60 billion-a-year business.

But the legislation does virtually nothing to curtail fraud. Instead, it takes a slash-and-burn approach. Most troubling, the legislation attacks Medicare Advantage, the one aspect of Medicare that’s working particularly well.

Under Medicare Advantage, private insurance companies offer an alternative to traditional Medicare. It’s not difficult to understand why the Democrats targeted this program.

Big-government types detest Medicare Advantage because it outsources to the private sector. Obamacare will cut it by $202 billion over 10 years, according to CMS.

“If you like your health care plan, you’ll be able to keep your health care plan, period,” Obama declared while campaigning for his legislation. “No one will take it away, no matter what.”

That’s certainly not true for the seniors on Medicare Advantage, who will see many of the benefits they’ve been enjoying vanish — along with their better health outcomes.

In 2011, the government will freeze payments to Medicare Advantage plans at current levels. Beginning in 2012, it will start actually reducing payments. Those cuts will then phase over two to six years.

The president claims that this is about “eliminating waste.” But the facts don’t bear it out.

It’s true that Medicare Advantage patients cost the government more than regular Medicare patients. But MA patients also get more — more benefits even than the government is paying for.

Medicare Advantage plans are health maintenance organization plans that are provided by private insurers. These plans offer far more choice than traditional government care, so they’ve become very popular in recent years.

The number of MA enrollees nearly doubled from 5.3 million in 2003 to 10.2 million in 2009. Currently about 22 percent of Medicare beneficiaries are in Medicare Advantage plans, and cuts to this program will affect a sizable portion of our seniors — making them worse off.

Medicare Advantage is also more cost-effective for taxpayers. Unlike its government-run brethren, Medicare Advantage doesn’t shift costs onto the privately insured, which means that when MA is cut, and more people shift over to regular Medicare, those extra costs will be borne by the privately insured.

Today, over 12 percent of Americans are senior citizens — and that figure is growing rapidly as more and more baby boomers turn 65. Assuming we live long enough, all of us will end up with Medicare coverage eventually.

Medicare is a big, expensive program — and costs do need to be contained. But Obamacare takes the wrong approach. It guts the best parts, exacerbates cost shifting and sets the stage for future rationing.

This is hardly the right way to take care of our oldest citizens.

How real reform is different from Obamacare
Under Obamacare, power-seeking politicians, mandate-wielding bureaucrats, and big business and labor union lobbyists hold the health care reins. (Photos.com)

To turn a phrase, there ought not to be a law; Obamacare should be booted from the U.S. Code and onto the ash heap of history.

Think it can’t be done? Guess again — Congress has reversed course on health care reform before.

On July 1, 1988, Congress passed the Medicare Catastrophic Coverage Act and raised premiums on seniors to finance this new benefit. Retirees went ballistic, and in one of the most memorable pieces of news footage ever, an angry mob of elderly Americans confronted then-House Ways and Means Committee Chairman Dan Rostenkowski, a Democrat from Illinois. They literally surrounded his car, smacked his hood with picket signs, and chased him down the street on foot.

On Nov. 23, 1989, Congress voted to repeal this wildly unpopular legislation.

The same thing could happen to Obamacare. Public opinion surveys consistently show that Obamacare’s unpopularity only grows as Americans learn more about it. A May 22-23, 2010, Rasmussen survey of 1,000 likely voters showed that 63 percent want Obamacare repealed. If voters make that displeasure known in congressional elections, voting against supporters of Obamacare and voting for those in favor of repealing it, things could change dramatically.

Republicans are carrying the anti-Obamacare banner. To overturn the law, they would need to secure 288 House votes and 67 in the Senate to withstand Obama’s veto of any repeal measure.

That’s a tall order. But ground gained in 2010 could make 2012, when Obama faces re-election, a different story. A change in the White House and further changes in Congress could make repeal not just possible, but even likely, if we the people are insistent enough about it.

If the court challenges to Obamacare fail, and it’s up to a new Congress and a new president to shred the old law and come up with a new one, here’s what they should do: craft real reform that covers the uninsured without destroying individual freedom, quality treatment, medical innovation and the economy.

How Obamacare will affect you
A true, patient-centered health care reform bill could start with these two ideas:

1) Promote private ownership within a thriving individual health insurance marketplace.

Real reform requires a brand-new model for health coverage. Employers do not provide their workers with auto insurance, home insurance, life insurance or fire insurance, and they shouldn’t be expected to provide health insurance, either.

Americans should be free to purchase individual health care plans. This would be their private property — just like their savings accounts, retirement portfolios and life insurance policies.

If companies or other private organizations want to provide group health insurance, that’s fine; there could even be something like Rotary Health for Rotarians and Yankee Health open to Yankees fans across America. Health insurance companies should compete for our business.

The goal of proper health care reform is to allow maximum choice within a flexible and innovative market guided by entrepreneurs and creative companies. What we have under Obamacare is a system designed by power-seeking politicians, mandate-wielding bureaucrats, and big business and labor union lobbyists.

2) Make health coverage portable.

If American workers — rather than their bosses — manage their own health plans, they can carry them from job to job, city to city, or even when they go back to school or take time off for personal or family reasons. Such portability would end “job lock” — staying trapped in a bad job because you don’t want to lose your health insurance. Employers are likelier to treat their employees better if they can’t use coverage as a shackle.

These changes are only two of 10 that I discuss in my book. But the first priority is getting Obamacare repealed. It won’t be easy.

Sally Pipes is president of the Pacific Research Institute and author of the new book “The Truth About Obamacare

Originally published in August 2010, as a three-part series on the Washington Examiner

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6 thoughts on “Obamacare will cost you your retirement

  1. Raimond

    Hey Jeff, if the ANOINTED ONE needed a hat to keep his head dry during a Washington D.C. shower, do you think that Paul Bunyan’s hat will be big enough to fit his head? Inquiring minds want to know.

  2. suzie

    Quote from Dickens, ” Decrease the surpluse population “….. that is what was intended all along. Kill off the old so there is more for the young at least for awhile since one day the young now will be old and hay how about the jobs to pay for the insurance ………

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  4. abbey

    Obama is just a lying sack of s..t! Those who didn’t vote for him knew it all along. SURPRISE Obama voters!!! You got what you deserve.


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