By Congressman Joe Pitts
Since the announcement of the Supreme Court's decision on the health law, it's been quite galling to watch various Obama administration figures try to deny that the individual mandate is a tax. The Obama campaign spokesman and White House Chief of Staff have both gone on TV denying that the administration ever argued that the mandate is a tax.
However, it was the Solicitor General himself who stated: "The minimum coverage provision is valid not only as a tax in its own right, but also as an adjunct to the income tax, as it merely provides an additional input in calculating the total amount owed on the taxpayer's income tax return."
Chief Justice John Roberts hung his argument for the constitutionality of the law on Congress' ability to tax. If he had joined the court's conservatives, the entire law would have been struck down.
Clearly, there is going to be an ongoing argument about the nature of the individual mandate. This shouldn't distract from the fact that the law contained 20 other tax increases. Each of these revenue raisers will have its own distorting effect on the economy and on the delivery of health care.
One of the tax changes in the law, requiring additional 1099 forms for small businesses, was so potentially harmful that it was repealed in 2011. This provision would have buried businesses in new tax forms while raising an inconsequential amount of money. Even supporters of the bill knew this was a terrible way to try to pay for new subsidies.
While the individual mandate tax penalty has attracted the most attention, the application of the employer mandate to provide insurance will probably affect millions of workers. Early estimates were that this tax would collect $52 billion over the next ten years. Employers who fail to provide insurance would be subject the penalty.
However, the penalty per employee will be less than the cost of actually providing insurance. When I held a press conference on the two-year anniversary of the law's signing, I invited doctors and small business owners to come talk about their concerns with the bill.
Kirby Sensenig, the owner of a local roofing company, talked about the competitive disadvantage that may face business owners who pay for insurance. He said, "It's going to become more and more difficult as my competitors take the $2000 penalty versus the $12,000 to $15,000 dollar premium [per employee]." While he's promised his own employees that he'll hold out as long as possible, he may have no choice but to dump his workers into the new health care exchanges.
The President may have promised, "If you like your health plan, you can keep it." However, most employees have little to no say in what insurance plan they are on.
One of the worst of the new taxes is the 2.3 percent fee on medical devices like pacemakers and hip implants. Device companies will have to pay the tax whether or not they are profitable. Already, some companies have cut back on employment to prepare to pay the tax starting next year.
In addition to the medical device tax, there will be a new annual tax on drug manufacturers and health insurance companies. New tax limitations on how you can use your health savings account and flex spending account are already in effect.
All of these new taxes are supposed to pay for the nearly $1 trillion in new spending contained in the law. Much of this new spending is for tax subsidies for some individuals and businesses. Not everyone will qualify for subsidies, but everyone will have to purchase federal government approved insurance.
When it comes down to it, most of the new taxes will actually contribute to higher premiums and increased cost of care. Health insurers, drug companies and device companies will pass along some of the costs. Employers will hold back on raises as insurance premiums get more expensive.
Individuals receiving subsidies may come to believe that the government is "helping" them purchase insurance. In reality, they will be paying back those subsidies in myriad ways. We needed real health care reform. Instead, the government has created a shell game with new taxes and benefits.