This New Year’s Day, millions of Americans won’t be suffering from short-term, self-inflicted, alcohol-induced hangovers from a night on the town. Instead, they’ll be suffering from an even more unbearable, persisting, and government-inflicted burden: The Obamacare Tax Hangover.
On January 1st, three of the law’s 19 tax hikes take effect, comprising this brand new, soon-to-be infamous hangover.
Affecting nearly every American is the law’s excise tax on brand-name drug manufacturers, which any honest person will readily admit is largely a tax on consumers as companies have little choice but to pass on this new cost in the form of higher drug prices.
At a time when the average household income has fallen 2.9%, the last thing struggling families need is another arbitrary burden from Uncle Sam.
The second area of new Obamacare taxation is targeted toward consumer-driven insurance plans such as health savings accounts (HSAs), flexible spending accounts (FSAs), and health reimbursement accounts (HRAs).
Although only 22.7% of Americans presently hold such plans, many see them as an important element of real health care reform. Consumer-driven plans empower enrollees to control their own health care dollars and allow their unspent funds to be rolled over into the future, encouraging them to live healthier lifestyles and be more judicious with their health care spending.
Indiana Governor Mitch Daniels has successfully introduced health savings accounts to his state’s government employees. Over 70% of his workforce has voluntarily adopted them, saving the average employee $2,000 a year, while also saving taxpayers around $20 million a year, or a projected 11% of the state’s annual health care costs.
Despite these promising returns, the architects of Obamacare would rather citizens have less control over their lives and be on a government-controlled plan, intentionally disincentivizing consumer-driven plans with two new tax increases.
As of January 1st the law forbids Americans from using these plans to purchase non-prescription, over-the-counter drugs. Now enrollees will have to purchase them out of pocket, effectively imposing yet another unnecessary tax on struggling Americans.
Also on this date the withdrawal tax on health savings accounts increases from 10% to 20%, directly feeding into the government’s coffers.
The last thing we should be doing is taxing what works, as basic economics dictates that by doing so you’ll get less of it. Congress should put an end to the Obamacare Tax Hangover and repeal these destructive tax increases.
Alex Cortes is the Chairman of Restore the Dream Foundation, whose initiative DeFundIt.org advocates for the de-funding of Obamacare.