Obamacare repeal helps middle class
As its first act of 2017, Congress is set to repeal Obamacare through a process known as budget reconciliation. This will fulfill the promise made by congressional Republicans to reverse Obamacare’s higher health care costs, give patients better choices and finally end billions in wasteful spending.
Repeal also is an opportunity for Congress to give Americans of all income levels more than a trillion dollars in lower taxes by repealing all of Obamacare’s new or higher taxes. Above all else, repeal of Obamacare should be hailed as a big win for middle-class families.
When President Barack Obama signed Obamacare into law he broke his promise not to sign “any form of tax increase” on any middle-class family. Many of the Obamacare tax hikes directly or indirectly hit middle-class families and increase costs, drive down wages and hinder creation of new jobs.
For years, conservatives have called for replacing Obamacare with a health care system that reduces costs, increases access and affordability of care, and empowers doctors and patients to make the best choices they need. The first step toward achieving this goal is through eliminating the many taxes that are used to enforce this system of governmentcontrolled health care.
Families faced with high medical bills — almost all of which are in the middle class — face an income tax increase because of Obamacare. Around 10 million families pay $200 to $400 in higher income taxes each year because the law increases the threshold at which families can deduct medical expenses paid out of pocket. Prior to the law, the threshold was 7.5% of AGI, but Obamacare increased this to 10%, a tax hike that affected taxpayers earning an average of $53,000 prior to implementation.
Not only does the law directly increase health care costs, it then drives up costs through a number of taxes on life-saving and life-improving medical products and services, including innovative medicines and medical devices. In addition, through the $130 billion tax on health insurance, Obamacare directly increases the costs of insurance for small businesses and families. This tax increases the bill for Wisconsin families by more than $3 billion a decade, and will increase the costs of insurance by more than $5,000 per American family over the same period, estimates the American Action Forum.
What makes this tax even worse is the individual mandate that explicitly forces everyone — including middle-class families — to purchase “qualifying” health insurance, as defined by the federal government. Failure to do so is an income tax penalty totaling more than $2,000 for a family of four. Then, when middle-class families try to save for future health care expenses they again face several tax hikes through restrictions on the use of tax-advantaged Health Savings Accounts and Flexible Spending Accounts.
Specifically, Obamacare punishes families for using HSA and FSA dollars for over-the-counter medications. Families had been making such household medicine cabinet purchases for years. The law also hikes taxes on FSAs by imposing a cap ($2,500) on the amount of income families can contribute to FSAs and increases the tax penalty on early withdrawals from HSAs.
These tax-preferred savings accounts are used in conjunction with insurance plans, which tend to cover large and/or unexpected health events and allow individuals to make choices that best fit their needs. Under Obamacare, their use has been restricted based on the false idea that government knows best.
Lawmakers in Wisconsin and across the country can give middle class families a needed tax cut by repealing all of Obamacare’s trillion dollars in taxes.