In the year 2011...

This is Part II...

Let's take a look at the provisions of Obama-care that take effect in 2011...

Medicare will provide free annual wellness visits and personalized prevention plans. New plans will be required to cover preventive services with no co-pay. In the simplest of economic times this provision will drive up demand on physician services. Economics 101 tells you that if you increase demand while keeping supply static you will increase cost. In 2006, the United States Department of Health and Human Services published a study projecting physician supply and demand through the year 2020. Their findings? "The growth and aging of the United States population will cause a surge in demand for physician services..." while supply will remain relatively static. Proponents of this provision say that these preventative measures will yield a long-term decrease in other, move involved, more expensive forms of care. I would be inclined to beleive them (to a point) were it not for the the litigious nature of healthcare. One of the provisions Republicans pressed hardest for was tort reform to address these ballooning costs which, according to one University of Connecticut study costs $1.4 billion per year... in Massachusetts.


This bill increases the Medicare payroll tax on individuals earning more than $200,000 and married couples earning more than $250,000. Two years later this segment of the population gets hit with an increase in the hospital insurance tax that accounts for a total tax hike of 3.8%. Soak the rich... except that most small business owners file through individual tax returns, so they will get hit with this even though that $250,000 return they filed may be getting pumped right back into the business they are trying to get off the ground or represent the first profitable year a business has had in several. Make no mistake - this is a job killer that will have a disproportionately negative impact on small business owners.


New taxes on Healthcare Savings Accounts (HSAs) and Flexible Spending Accounts (FSAs) take effect. This one gets a bit complicated so stick with me.

HSAs are a relatively new form of Health Insurance featuring very high deductibles (over $1,500 per person). The benefit is that it works on a fee for service basis. You can put money, as much as you want, into a tax-free account and withdraw those funds, again tax free, to pay for medical services and medications, including over the counter (OTC) medications. If you spend the money on unqualified expenses they are subject to a 10% tax... until 2011, when that tax goes up to 20% and the OTC benefit goes away. These provisions are expected to bring in at least $5 billion in revenue.

Now FSAs allow you to deposit pre-tax dollars into an account. These funds may then be spent, tax free, throughout the year on qualified medical expenses; things like co-pays, prescription contacts & eyeglasses and certain over the counter drugs. Anything left in the account at the end of the year you lose and contributions are unlimited... until 2011. When this portion of the bill takes effect annual FSA contributions will be limited to $2,500 and over the counter (OTC) medications will no longer be considered as qualified expenses. This second part is important because if you overbudget your FSA at the end of the year you can always use the money for OTC medications to avoid losing the money. But no big deal right, people will just get smarter about how they manage their FSAs right? Well Congress hopes not - they are counting on these two provisions raising more than $11 billion in revenue... That seems like a really sleazy way to steal people's money.