Repealing ObamaCare taxes would lower health costs today

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The health care debate has centered on how to best lower costs and promote affordability and access.

In the aftermath of the effort to repeal ObamaCare, senators said they would hold bipartisan committee hearings in September focusing on how to achieve these goals in the insurance markets. Inevitably, those on the left will advocate for throwing more taxpayer dollars at the failing ObamaCare markets.

However, these proposed solutions treat the symptom, not the cause. To address the larger problem — high costs and restrictive regulations and mandates, Congress should act on ObamaCare taxes in two steps.

{mosads}First, Congress must promptly act to delay the ObamaCare health insurance tax and medical device tax so they do not again go into effect onJanuary 1, 2018. Second, lawmakers can promote affordability and access to health care by working to repeal all ObamaCare taxes.


Since it was signed into law seven years ago, ObamaCare has imposed a trillion dollars in new or higher taxes on the American people over a decade including a tax on Americans facing high medical bills, taxes on health savings accounts, the tax on innovative medicines, and the tax for failing to buy health insurance. They have all caused significant harm to middle-class and low-income families across the country.

For instance, the law’s individual mandate tax penalty imposes a tax on households that fail to purchase government-approved health insurance. Eight million Americans paid this tax in 2014, with a family of four facing an income tax totaling $2,000. Almost 84 percent of those affected earned less than $50,000 per year, while 46 percent of families affected made less than $25,000.

Americans with high medical bills also face higher taxes under ObamaCare. Around 10 million families pay up to $400 in higher taxes each year because the law increased the threshold at which families can deduct medical expenses from 7.5 percent to 10 percent. The average taxpayer affected by this tax earns just $53,000 per year.

Even ObamaCare taxes that are imposed on businesses inevitably increase costs of health care for families as they are passed on in the form of higher costs. As noted by a Tax Foundation analysis, the tax on innovative medicines has directly increased the cost of medicines for consumers. If lawmakers are serious about reducing the cost of medicines, they should start with repeal of this destructive $3 billion tax.

While the preferable solution should be full repeal of all ObamaCare taxes, this appears unlikely in the near future given Congress’ failure to pass conservative health care reform earlier this year. In the short term, Congress needs to act to prevent even more ObamaCare taxes from going into effect. Starting January 1, 2018 the ObamaCare health insurance tax and medical device tax will go into effect, leading to even higher costs for middle class families, small businesses, and seniors. Already, costs are expected to increase, with Obamacare premiums expected to increase by double digits in many parts of the country next year.

Failing to stop these two taxes would only exacerbate skyrocketing health-care costs and cause jobs to be lost across the country.

The ObamaCare health insurance tax is a key driver of costs — it is responsible for increasing premiums by an average of $5,000 per family over a decade according to research by the American Action Forum, and half of the tax is paid by those earning less than $50,000 a year.

The tax hits 11 million households that purchase through the individual insurance market and 23 million households covered through their jobs. It is also harmful to businesses — hitting an estimated 1.7 million small businesses, costing 286,000 small business jobs and reducing sales by $33 billion.

The medical device tax is similarly harmful to small businesses and raises the cost of numerous medical products. As noted by the Congressional Research Service, the costs of the medical device tax are primarily felt by consumers in the form of higher costs. If it allowed to go into effect, the medical device tax could lead to as many as 25,000 lost jobs by 2021.

Ensuring the ObamaCare health insurance tax and medical device tax do not go into effect next year is a crucial first step toward lower health-care costs. But this is only the first step.

Over the long-term, lawmakers must continue working to repeal all ObamaCare taxes as part of reforms that increase access to care, lower costs, and get the government out of health care.

Alex Hendrie is the director of tax policy at Americans for Tax Reform, a nonprofit aimed at promoting lower taxes.

The views expressed by contributors are their own and are not the views of The Hill.

Tags Alex Hendrie Barack Obama Budget Donald Trump economy Healthcare Internal Revenue Code ObamaCare Patient Protection and Affordable Care Act spending taxes

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