The PPACA Is Emptying Your Wallet

All we hear about the PPACA is process, and little about people: signup and cancelation numbers, Health Insurance Exchanges keeping people on “hold” forever, doctor shortages, deferred deadlines, hospitals closing, and insurers leaving the market. What does all this mean for you and me, and for the average American?  How does the PPACA affect our day-to-day lives, and especially our pocketbooks?

(I prefer to use the full title – PPACA [Patient Protection and Affordable Care Act] – rather than the abbreviated ACA [Affordable Care Act].  President Obama’s namesake law is supposed to protect patients, make our lives more affordable, and make health care more accessible.  We should judge its success or failure based on whether we realize those outcomes.)

Seventy-two percent of all Americans – and thus the entire middle class – will experience a decline in income.  Our money will be redistributed to (a) those making less than $20,000/year and (b) the bureaucratic class, numbering in the millions and growing.

The PPACA was first called health care reform.  Then the president said it really was health insurance reform.  The law is, in fact, a tax law.  This is confusing in light of what Senator Obama said before he was president on a campaign stop on October 4, 2008: “Health insurance should never be purchased with tax increases on middle-class families.”

We will have to pay more for a variety of purchases due to new or expanded taxes, both direct and indirect.  The PPACA takes control of our money under the following guises.

New taxes created by PPACA

  • Cadillac tax
  • Earned Income Tax
  • Employer Mandate Tax
  • Excise Tax on Charitable Hospitals
  • Health Insurers Tax
  • Innovator Drug Tax
  • Medical Device Tax
  • Medicine Cabinet Tax
  • Personal Penalty Tax (formerly the Individual Mandate)
  • Net Investment Income Tax
  • Tanning Salon Tax (Why not a tax on tattoo parlors, or a pedicure tax?)

Existing taxes that are increased by PPACA

  • “Black Liquor” (Bio-Fuel) Tax
  • Medicare Payroll Tax
  • Blue Cross/Blue Shield Tax
  • HSA (Health Savings Account) Withdrawal Tax

Existing taxes that are decreased by PPACA

  • None

Consumers limited in control their own money

  • Flexible Spending Accounts capped at $2,500
  • HSA contributions capped at $2,500

The Supreme Court preserved the individual mandate by changing it to a penalty tax for not purchasing PPACA-acceptable health insurance.  Currently, that tax is $95/year or 1% of your income, whichever is greater.  After the 2016 elections, it escalates to a 2.5% tax, piled on top of all the other taxes.

The Cadillac tax sets a new record for disingenuous naming.  It targets schoolteachers, policemen, steel workers, and small business owners – hardly the kind of people who drive $80,000 Escalades. 

The cost of health insurance has risen an average of 41%.  In some states, they have increased as much as 179%, producing what some call “sticker shock.”  In addition to insurance, the cost of health care itself in going up.  What we couldn’t afford before is now even more unaffordable.  Wasn’t healthcare reform supposed to do bring down our costs?

If you compare the most optimistic estimate of ObamaCare insurance signups to the confirmed cancelations, the number of uninsured Americans is going up, not down.  Wasn’t the PPACA supposed to “remove the stain on our national honor of having 50 (no, 45…30…20) million uninsured Americans”?

Of course, there are federal subsidies to cover some of the increased insurance cost.  But keep in mind that that is our money that Washington is giving back to us after the government takes its cut.  One estimate suggests that 40% of all healthcare dollars is consumed by the bureaucracy and thus produces no health care at all.  Despite Washington’s claim that healthcare spending increase has slowed, less self-serving sources see further healthcare spending inflation in our future.  How does the PPACA help either our health or our wallets?  

Unfortunately, our wallet shrinkage is going to get worse. Not only is more coming out, but less is going in.  Employers work within their budgets, as they cannot print money.  If government raises the cost of doing business and then forbids the business from charging more, businesses either find other ways to cut costs or close their doors.  That is true for a doctor’s office, a hospital, an insurance company, your neighborhood dry cleaner, or an auto manufacturer.

To cope with the PPACA’s increased fixed costs, employers are utilizing a number of tactics to avoid bankruptcy.  Some are cutting their full time workforces to get below the magic number of fifty so that PPACA penalties will not apply (at present).  One car dealership reduced its workforce from 168 full-time employees to two!  Pennsylvania’s Community College of Allegheny County reduced the number of work hours of more than 400 adjunct professors, support staff, and instructors, making them part-time.  That way the College avoided PPACA costs, and simultaneously reduced its payroll.  And of course, the employees then have even less in their wallets.  

In addition to being reduced to part-time employees, there are the job losses attributable to the PPACA.  UnitedHealth fired over four thousand doctors from its panels.  (What do you think that will do to your wait time to see a physician?)  The CBO recently estimated that the president’s health care (really health insurance) reform act will cost the nation more than 2.5 million jobs over the next ten years.

What about the effect on the nation’s wallet, our collective treasury?  The PPACA is estimated to cost over $1.7 trillion – money we do not have.  Thus, we are creating a debt that we must pass on to our children to pay.

Even as you and I are losing our jobs, there is one sector where there is job growth: in healthcare administration.  Hospitals are creating non-provider, bureaucratic jobs in order to deal with all the new rules and regulations.  And then there are government jobs.  You know what I mean – the ones you and I pay for.  

The PPACA creates six whole new federal agencies, each with layers of organizational charts on top of each other.  This incomprehensibly complex law comprises over 2,400 pages of legislation, which in turn has so far produced more than 10,500 pages in the Federal Register.  These are pages of rules and regulations, still being written, revised, rewritten, and re-rewritten, delayed and deferred four years after the law’s passage.

Think about all the tens of thousands (hundreds of thousands?) of bureaucratic jobs generated by the PPACA.  There are actuaries, administrators, billers, coders, compliance officers, consultants, lawyers, managers, marketers, navigators and in-person assisters, initial programmers (and then different programmers to fix what the initial programmers did), overseers, regulators, rule-writers, etc.  If you want to know where all our “healthcare” money is going, there is your answer.

I know all this for a fact.  I am one of those who are spending your money.  I am a member of the Board of Directors of our state-based Health Insurance Exchange, mandated by the PPACA.

Dr. Deane Waldman (M.D., MBA) is the host of the free newsletter The Hidden Enemy, author of The Cancer in Healthcare, a member of the Board of Directors of the New Mexico Health Insurance Exchange, adjunct scholar for the Rio Grande Foundation, and emeritus professor of pediatrics, pathology, and decision science at the University of New Mexico.

If you experience technical problems, please write to