Wednesday, March 5, 2014

Obamacare: The Big Punt

In what is becoming an epic embarrassment, the WSJ reports that the Obama administration announced today that consumers can keep insurance plans that don't comply with the federal health law for another two years, pushing a potential firestorm over cancellations and broken promises that "you can keep your health plan".

The democrats want to survive the next mid-terms.

My guess is the insurance portion of the law will never be fully implemented as written.

Two years ago, when the Supreme Court was ruling on the constitutionality of the law, I wrote the following:

I have long believed that the health care portion of ObamaCare was always was the Trojan Horse for something more valuable to government.

“What?” you say. “How can the health care portion of health care legislation be secondary, or be unimportant? That was the entire point.”

I believe the entire point was the tax increase – an increase that is certain to survive, no matter what the court decides regarding the insurance and no matter who is elected in November (except, of course, you know who). However, it isn’t just a tax increase, but a new tax on a new source of income.

The new tax is the Medicare payroll tax applied to investment income.  This tax previously only applied to wages.

This tax, for the first time, applies Medicare taxes to income earned on capital – a 3.9% increase applicable to those earning over $200,000 / $250,000. As with all newly introduced taxes, rest assured the rate will slowly go higher while the threshold will grow lower (either in nominal, but certainly in real terms).

Wanna bet Obama never delays this portion of the law?

1 comment:

  1. I rarely comment but always enjoy your insights. Please keep writing.