The announcement scheduled for later this month that seniors can expect about a 2.8% cost of living (COLA) increase in their social security (following 2018 2% increase) is another indication that the Obama era practice of diverting funds meant for older Americans to other groups is coming to an end.
As America’s national debt rapidly soared to the $20 trillion mark under the prior Administration, key needs such as defense and the fiscal and medical health of seniors took a back seat to other priorities.
Since the regular program of Cost of Living increases began in 1975, (prior to that increases were provided by legislation) there has never been a period when such adjustments were lower than they were under President Obama. Not once had there been a year in which there was no increase at all. Since 2009, two consecutive years, 2009 and 2010, provided no adjustments, and there was also no adjustment in 2015. Before 2009, the average annual increase was 4.4%; during the Obama presidency, it was 1.7%.
But Social Security was only one area in which seniors were detrimentally affected. In 2012, Americans for Tax reform performed an analysis of the 20 new or higher taxes resulting from Obamacare, and pointed out the five that most directly harmed seniors:
Individual Mandate excise tax penalty. Many seniors face a coverage gap between retirement and Medicare eligibility. Obamacare raises taxes on these younger seniors by punishing them if they don’t purchase “qualifying health insurance.” Set to go into effect in 2014, the excise tax penalty for mandate non-compliance will in 2016 rise to 2.5% of adjusted gross income for a senior couple (or $1390 for those making less than $55,600). Why does Obamacare raise taxes on seniors just as they are entering retirement?
“Cadillac Plan” excise tax. Starting in 2018, Obamacare imposes a whopping 40% excise tax on high-cost (“Cadillac plan”) health insurance plans. This is defined for seniors as a plan whose premiums exceed $29,450 for a family plan, or $11,500 for a single senior. Seniors often face higher costs in health insurance premiums due to chronic health conditions and other risk factors. This tax is almost exclusively a tax which will fall on seniors with the greatest health insurance needs.
Dividends tax hike. Starting in 2013, the top tax rate on dividends is scheduled to rise from 15% today to 39.6%. In addition, Obamacare imposes a dividend “surtax” of 3.8% on families making more than $250,000 per year. That would create a top dividend tax rate of 43.4%, nearly triple today’s rate. This will fall very hard on seniors. According to the Tax Foundation’s analysis of IRS data, 70% of households over age 55 receive dividend income. 71% of all dividends paid flow to these households. To raise taxes on dividends is to raise taxes on seniors.
Medical device excise tax. Obamacare imposes a new excise tax on medical device manufacturers in 2013. These companies will surely build the cost of this new tax into the price of what they sell. Who buys medical devices? Who buys pacemakers, wheelchairs, and other costly medical devices? Seniors do.
Reduce allowable medical itemized deductions. Under current law, medical itemized deductions can be claimed on tax returns, but they must be reduced by 7.5% of adjusted gross income. Obamacare increases this “haircut” to 10% of AGI in 2013. This will mean that millions of Americans claiming medical itemized deductions will no longer be able to. The same IRS data as above tells us that 60% of all tax returns claiming this deduction are over age 55.
An Investors study noted that “One of the most important sources of funds that are being used to pay for ObamaCare comes from cuts in future Medicare spending. In 2016 Investors also study npointed out that “A letter issued by the Medicare Office of the Actuaries at the time ObamaCare became law warned that Medicare fees paid to doctors and hospitals will fall increasingly behind what other payers will be paying in future years – threatening access to care. That warning was repeated in the latest Medicare Trustees report, which warns that by 2040 half of all hospitals, 70% of all skilled nursing homes and 90% of home health care services will not be able to survive under Medicare’s increasingly skimpy fees.”
The Galen Organization summarized Obamacare’s impact on Medicare:
“ObamaCare doesn’t modernize the program or improve it for seniors. ObamaCare’s solutions are detrimental to today’s seniors:
- The law takes $716 billion out of Medicare over 10 years to help fund a huge expansion of taxpayer subsidies for health coverage.
- It creates an unelected, unaccountable board — the Independent Payment Advisory Board — with powers to limit payment and access to health care for seniors and which will become Medicare’s rationing board. ObamaCare drives your doctors and hospitals out of Medicare
- The law makes deep cuts in payments to physicians treating Medicare patients.
- Cuts to Medicare providers mean it will be harder for seniors to find doctors and hospitals to treat them.
- Doctors are already threatening to drop out of the program in large numbers if the payment cuts go into effect.
- Medicare actuaries predict that more than 40% of Medicare providers eventually will either go out of business or stop seeing Medicare patients altogether if the law’s cuts take effect.”
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While the deficient Social Security COLA’s have been addressed, other Obama-era challenges to seniors, particularly those in Obamacare, still remain unresolved.
Illustration: Social Security card (Social Security Administration)