Site menu:


March 2013 Policy Study, Number 13-3


Just Say NO – and Keep Saying NO – to Federal Health Care Exchanges and Medicaid Expansion


Obamacare So Far…



Thomas Sowell said it best:
“If we cannot afford to pay for doctors, hospitals, and pharmaceutical drugs now, how can we afford to pay for doctors, hospitals, and pharmaceutical drugs in addition to a new federal bureaucracy to administer a government-run medical system?”[1]


And we will pay for all this with federal and state government tax money, while not increasing taxes on anyone?


The promise of the Patient Protection and Affordable Care Act (PPACA) passed in March 2010, and better known as Obamacare, was that all Americans would have health insurance, that access would increase, and costs would go down. Most famously President Barack Obama promised American families, on multiple occasions, that PPACA would “cut the cost of a typical family’s premium by up to $2,500 a year.”[2]


At this time, none of these promises are true, and none appear to have any hope of becoming true. In the three years since the passage of the PPACA, health care news has all been bad – access is going down and costs, for both premiums and service, are going up. Additionally, taxes are going up significantly in order to pay for the administrative takeover of health care by the government.


Reports are already showing declining access to health insurance, as employers chose to drop coverage for their employees or alter their hiring so that they are not required to provide coverage. Based on a wide variety of estimates, from 11 to 35 million workers will lose employer-based coverage, basically equal to those gaining coverage.[3]


The Congressional Budget Office indicates that though the number of uninsured will drop from 56 million, approximately 26 million people will still not have health insurance even after PPACA is fully implemented.[4] This is even though all Americans will be required to purchase health insurance and fined if they do not.


Health insurance costs already rose by 7.5 to 9.5 percent or more from 2010 to 2011, with the cost for a family policy – whether paid by the employer or an individual – rising to over $15,000 a year, and individual policies going to almost $5,500.[5] Cost increases from 2011 to 2012 were comparable, and are continuing to rise. For 2013, Aon Hewitt’s (a Chicago-based employee benefits company) employers are reporting an average 8 percent premium increase to their employees.[6]


Contrast this with the original claims of Senator Harry Reid, Congresswoman Nancy Pelosi, and the Obama administration of policy cost reductions.


On the tax side, a new 96-page report from the Joint Committee on Taxation on the tax implications of PPACA details 21 tax increases. They estimate the total taxes to be collected at just over $1 trillion ($1.058 trillion). Initially, the tax increases were estimated at a paltry $569 billion when Obamacare was passed in March 2010.[7] According to this report, the largest new taxes are the 0.9 percent payroll tax on wages and self-employment income, and the 3.8 percent tax on dividends, capital gains, and investment income for those workers earning over $200,000 (singles) / $250,000 (married).[8] The amount to be collected from these two new taxes alone is now estimated at over $315 billion. These are new taxes on virtually all workers.


Additionally, major new taxes are going to be collected both directly from employers ($106 billion) and from health-insurance providers ($102 billion).[9] The money employers pay in taxes cannot be used to increase wages or hire new workers, and the cost of the tax on health-insurance providers will naturally be passed on to the health-insurance purchasers – whether individual workers or their employers.


The medical device tax of 2.3 percent, which took effect as of January 1, 2013, and impacts a wide variety of businesses, has received the most attention. It is expected to total $30 billion over ten years, and will be passed onto the insurance companies and consumers. The medical device tax was actually overturned in a symbolic vote in the U.S. Senate on March 21, 2013. Thirty-three Democrat Senators joined all 45 Senate Republicans in voting to overturn it. This included four of seven who are in Democrat leadership positions.[10]


Though the Supreme Court ruling in 2012 that state governments were not required to expand Medicaid in order to continue to receive federal funds for current coverage provided some relief to the onerous regulatory burden of PPACA, the Obama administration continues to try to force both health care exchanges and expanded Medicaid on unwilling states.



Click here for pdf copy of this Policy Study


All of our publications are available for sponsorship.  Sponsoring a publication is an excellent way for you to show your support of our efforts to defend liberty and define the proper role of government.  For more information, please contact Public Interest Institute at 319-385-3462 or e-mail us at