When the subsidized exchanges open in 2014, ObamaCare will become a redistribution program. This year, it's primarily a tax collection program.
The health law will shrink the fiscal 2013 deficit by $34 billion due to $36 billion in revenue, the Congressional Budget Office predicts.
Thus, ObamaCare's ramp-up will be an economic drag, made steeper by employers' shifts to avoid fines that kick in next year.
While much of the new taxes will come from high earners, ObamaCare's tax net will be impossible to avoid for the middle class. Pretty much anyone who uses medical care will pay up, since fees on insur ance policies, prescription drugs and medical devices are sure to be passed along to consumers.
Likewise, tax penalties for employers who fail to offer affordable and comprehensive coverage would come at least partly out of wages for moderate earners.
In all, ObamaCare is expected to raise about $800 billion in revenue over 10 years, including penalties on individuals and firms for not complying with new mandates.
Here are ObamaCare's major sources of tax revenue projected from 2013 through 2022:$318 billion from a hike in Medicare payroll taxes on households earning more than $250,000, starting this year.
$111 billion from a tax on insurers for offering high-cost or "Cadillac" plans, starting in 2018.
$106 billion from penalty payments by employers of up to $3,000 per full-time worker who gets subsidized coverage via ObamaCare, effective 2014.
$102 billion from a fee on health insurance providers, starting at $8 billion in 2014.
$45 billion from the individual mandate tax penalty, effective 2014, rising to the greater of $695 or 2.5% of income by 2016.
$34 billion from a fee on manufacturers and importers of branded drugs, effective 2010.
$29 billion from a 2.3% tax on manufacturers and importers of medical devices, though not devices bought at retail, as of Jan. 1.
$24 billion from capping pretax deposits into flexible spending accounts for health expenses at $2,500, effective 2013.
$19 billion from raising the floor on tax-deductible medical expenses to those above 10% of income, up from 7.5%, as of 2013.
$5 billion from disallowing pretax purchases of over-the-counter medicines, starting 2011.
Some $30 billion in ObamaCare tax hikes took effect in January as part of the broader $200 billion fiscal-cliff tax hike which has the economy lumbering along at a sub-2% growth pace.
But ObamaCare's economic impact this year reflects the law's current and future taxes.
Employers have until midyear to adjust staffing levels and hours before they begin to influence potential 2014 fines.
Retail and hospitality firms have signaled that ObamaCare will force them to make changes and the January jobs report suggested that the shift has begun.
IBD previously reported that total hours worked in those two sectors fell in January even as payrolls increased. The average retail workweek fell to a nearly three-year low of 30.1 hours.
Companies with fewer than 50 full-time-equivalent workers will not face fines. Larger firms may cut the size of their full-time staff, since they aren't obliged to pro vide coverage to employees working less than 30 hours per week.
Firms expecting ObamaCare costs in 2014 due to penalties or high coverage requirements may limit wage hikes this year.
- Health Care Policy
- Congressional Budget Office