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A longtime friend, Bob DeGarmo, is a Principal of Entrepreneurial Resources, a service provider to closely-held businesses.  Bob sent me an excellent and thorough projection of the likely impact of The Patient Protection and Affordable Care Act.  Here's Bob's analysis:  

Obama Care: Ready, Set, Duck

The Patient Protection and Affordable Care Act has passed both houses of Congress, been signed by the president, and amended by a 151 page reconciliation bill created by the House. Now what?

Outside of a few congressional staffers, no one really knows what is in this massive piece of legislation and won’t   for years. Much needs to be fleshed out with regulations by the Secretary of Health and Human Services. When one wades through this, the scope and reach of this legislation is stunning.

We thought a summary timeline outlining the significant measures that impact individuals and midsized companies would be the most useful way to gain some perspective on the impact of this bill. If you don’t understand this bill, hopefully this will focus your attention on that which will impact you and when it occurs. I was surprised by how many articles and websites we had read to gather this modicum of information.  For those who understandably might suspect a conservative bias, we have compared the timeline to and drawn information from the Democrat Policy Committee website and believe the timeline is consistent with their summary.

 Provisions that will drive up healthcare insurance cost generally (particularly for younger people) are:

1.     No exclusion for preexisting conditions # 21

2.     No annual or lifetime maximum benefits limits allowed #23

3.     Varying requirements to provide preventive care with no copayments # 27

4.     Can’t charge seasoned citizens more than 3 times 20 year olds #28

5.     Penalties for no coverage are relatively low. Why buy before you need it? #26

6.     The Secretary of HHS has to define what a policy must include. The differences in state mandates account for dramatic differences in premiums among states. If the federal government adopts New York mandates insurance rates in the southeast will rise dramatically approaching New York rates.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Taxes

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

3.8% tax on unearned income for families with income over $250,000, individuals $200,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2

40% Excise tax on "Cadillac plans" individual $10,200 family of Four $27,500

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3

Beginning in 2013, income over $200,000 for individuals and $250,000 a year for couples would be hit with a 2.35 percent Medicare payroll tax instead of the existing 1.45 percent rate.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4

In addition, the high income earners are taxed 3.85% on unearned income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5

Imposes an annual flat fee of $2.3 billion on the pharmaceutical manufacturing sector

2.3

2.3

2.3

2.3

2.3

2.3

2.3

2.3

2.3

2.3

2.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6

Imposes an annual fee of $2 billion on the medical device manufacturing sector 3 Billion after 2017

 

 

 

2

2

2

2

2

3

3

3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7

Imposes an annual fee on the health insurance sector

 

 

 

 

2

4

7

9

9

9

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

8

Limits the deductibility of executive compensation for some insurance providers  (“covered health insurance provider”). The deduction is limited to $500,000 per taxable year and applies to all officers, employees, directors, and other workers.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

9

Imposes a ten percent tax on amounts paid for indoor tanning services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

Increases the adjusted gross income threshold for claiming the itemized deduction for medical expenses from 7.5 percent to 10 percent.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

11

Increases the additional tax for HSA withdrawals prior to age 65 that are not used for qualified medical expenses from 10 to 20 percent. The additional tax for Archer MSA withdrawals not used for qualified medical expenses would increase from 15 to 20 percent.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Medicare

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

12

Expands Medicaid to include 133 percent of federal poverty level which is $29,327 for a family of four

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

13

Requires states to expand Medicaid to include childless adults

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

14

Federal Government pays 100% for all NEW Medicaid enrollees

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

15

Provides a $250 rebate check for all Part D enrollees who enter the donut hole. (between $2,830 and $6,440 in total drug spending)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

16

Seniors get 50 percent discount on brand name drugs      Donut hole completely closed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

17

Medicare is required to provide preventive care without co-payments and deductibles

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

18

Subsidies for Medicare Advantage will be cut

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

19

Provides a 10 percent Medicare bonus payment for primary care physicians and general surgeons.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

20

Primary care physicians treating Medicaid patients will be paid  up to 100%  of Medicare rates beginning in 2013.  Today Medicaid pays only about 70% of what Medicare pays for the same services.