In 2010 the Congress passed and President Obama signed into law new health care legislation that enforces major changes to health care and the health insurance systems in the United States. There are two parts that make up the law. Part one is the Patient Protection and Affordable Care Act. The second part is the Health Care and Education Reconciliation Act of 2010. The law covers many changes; primarily it requires that every legal resident must have health insurance but does allow for exceptions.Refusal to have health insurance will result in a per-person tax that starts at $95.00 in 2014, $325 in 2015 and up to $695 when fully phased in.Families will be capped at triple the per-person rate no matter how large the family is. Exemptions exist for low-income persons and hardship cases.
The law provides health insurance options and creates insurance exchanges that help defray a large portion of the cost of medical insurance. Additionally, the law increases eligibility for Medicaid; reduces Medicare payment rates; creates an excise tax for insurance plans that have high premiums; imposes taxes on those with high incomes; and makes changes to the federal tax code, Medicare, Medicaid and other programs.
Will the Affordable Care Act raise taxes and cut Medicare?
After the Supreme Court upheld the constitutionality of the Affordable Care Act, presumptive GOP presidential nominee, Mitt Romney, stated that “Obamacare” raises taxes by approximately $500 billion.
Fact: The Affordable Care Act raises taxes on some Americans. Americans with incomes of $200,000.00 and up and couples making $250,000.00 and up will have to pay a Medicare payroll tax of 0.9% along with a 3.8 percent tax on investment income (capital gains). According to the Joint Committee on Taxation, the health care law included $437.8 billion in tax revenue over 10 years with the largest chunk of revenue ($210.2 billion) coming from this tax.
Romney has also stated that Medicare will be cut by $500 billion.
Fact: Medicare will be reduced by $500 billion (reduction of 7%) in terms of future growth over the next 10 years. Further the law states that Medicare benefits would not be reduced; rather new benefits, such as better pharmaceutical coverage, will be added.
Most of the savings comes from many Americans who will be able to afford health insurance, due to the changes in the law, and therefore no longer need to be on Medicare. According to the CBO, once all the revenue streams are factored in the Affordable Health Care law actually reduces the federal deficit by $210 billion between 2012 and 2021.