E-mail updates
Follow on Twitter
Subscribe to RSSUpdated 5:35pm ET Even as President Barack Obama and House Speaker John Boehner struggle to find a way to avoid income tax increases in the New Year on almost all households, a separate set of tax increases which Obama signed into law as part of the 2010 Affordable Care Act (ACA) will begin to affect workers, investors and employers on Jan. 1.
Speaker of the House John Boehner provides an update on the fiscal cliff negotiations, placing pressure on the White House to reveal how they intend to compromise with House Republicans on spending cuts.
Even if Boehner and Obama reach a deal on the “fiscal cliff,” $24.6 billion in 2013 Obamacare tax increases must take effect on Jan. 1 in order for the carefully designed health care overhaul to function in budget terms as its supporters promised it would: not adding anything to future budget deficits, but, according to an estimate by the Congressional Budget Office (CBO), reducing cumulative deficits by $132 billion between 2010 and 2019.
The Obamacare tax increases which begin on New Year’s Day are:
- A 2.3 percent tax on manufacturers and importers of medical devices.
- A limit on the tax deductibility of medical expenses for people who pay some of their medical costs out of pocket.
- A limit on tax-sheltered health flexible spending accounts.
- An increase in the Medicare payroll tax on single earners making more than $200,000 and married couples making more than $250,000.
The delicate balance of tax increases and spending increases in Obamacare will work only if Congress allows the tax increases to take effect, so they can offset the cost of substantial new insurance subsidies and other Obamacare outlays.
But some Senate Democrats are trying to delay at least for one year the tax on medical device manufacturers, which will raise nearly $2 billion in new revenue in 2013 and $20 billion over the next seven years.
President Barack Obama has no public events planned for Tuesday and not many planned for the remainder of the week. Many at the White House and in Congress believe, the less anyone campaigns publicly, the better their chances at striking a deal. The Daily Rundown's Chuck Todd reports.
In a letter Monday, Sen. Amy Klobuchar, D-Minn., Sen. Kay Hagan, D-N.C. and others asked Senate Majority Leader Harry Reid to work to postpone the medical device tax.
Both Klobuchar and Hagan voted for the ACA and Minnesota is home to one of the biggest medical device makers, Medtronic.
A delay in the tax could be part of the year-end fiscal package. “My guess that it would be part of bigger deal before the end of the year,” Klobuchar told NBC News Tuesday.
The Democrats calling for delay are emphasizing the need for medical device industry jobs.
“We’re focused on this because there’s a number of small start-up companies (which would be affected by the tax),” Klobuchar said. The medical device tax was set to raise $40 billion over 10 years “and then reduced in half without real negotiation about how it would affect jobs and the industry. So this one, above all to me, cries out for a change.”
Sen. Kent Conrad, D-N.D., shares the latest on fiscal cliff negotiations.
She said the IRS regulation spelling out exactly how the tax will be collected and enforced was issued last week toward the end of the year “without giving them (the medical device firms) time to figure out how to comply. So we’re simply at this point looking for a delay and if we can make some changes to reduce or repeal it, that would be the goal,” Klobuchar said.
Hagan said, “There’s so much innovation in this field right now and they do create so many good jobs in our country that we have the risk of losing these jobs to Ireland and to many other countries. And that’s the problem,” said Hagan, who is up for re-election in 2014.
When she added that the tax would have “an adverse effect on jobs throughout our country,” she was asked whether the tax – after the one-year delay that she and Klobuchar are requesting – would have an equally adverse effect on jobs in 2014. “We can certainly look at that over time,” she said.
J.C. Scott, senior executive vice president of government affairs for the Advanced Medical Technology Association said, "We appreciate Sen. Klobuchar and Sen. Hagan's leadership on this issue and also appreciate the broad bipartisan support for preventing the implementation of the device tax which is slated to go into effect Jan. 1. Delay of the tax is an important step, but Congress must fully address the device tax as it works to develop a long-term solution to help our economy move forward, reduce our debt and reform our tax code."
Fmr. Gov. Haley Barbour, R-Miss., and NBC News' Chuck Todd join a conversation on the fiscal cliff proceedings. Barbour says he thinks the GOP should accept for a raise in tax rates for the country's wealthiest for a broader package that deals with entitlement reform.
The industry group said that the U.S. medical technology industry supports nearly 2 million jobs and that nearly 43,000 jobs might be at risk if the tax takes effect.
But a Senate Finance Committee aide told NBC News Tuesday, "Medical device companies are expected to enjoy trillions of dollars in growing sales over the next decade, with profit margins that would make Warren Buffett blush. Health reform is providing the medical device industry with 30 million new customers and Medicare is the industry's largest paying customer. Particularly at a time when we're all working to cut our debt, there's no need to single out any industry for a special carve out."
If the call from Democrats such as Klobuchar for delay and “reduce or repeal” reflects a weakening of support for Obamacare’s revenue raisers, that could be worrisome for both deficit reduction and cost reduction since both of those were goals of Obama’s health care overhaul.
Even as they voted for the health care overhaul in 2010, some congressional Democrats said they thought that another one of the tax increases in the law, the tax on high-cost “Cadillac” health insurance plans would never fully take effect because Congress would water it down or repeal it before 2018 when it is set to effect.
Hannah Foslien / AP
Sen. Amy Klobuchar, D Minn., speaks at an election night event at the Crowne Plaza on Tuesday, Nov. 6, 2012 in St. Paul, Minn.
If Democrats delay, reduce or repeal the medical device tax, then the ACA will not cut costs as much as its proponents and the CBO predicted it would.
Senate Democratic Whip Dick Durbin of Illinois made exactly that point in comments to reporters Tuesday: “I’ve met with medical manufacturers in my state. And I think many of them are going to face some serious hardships when it comes to their competitive edge and research. But I’ve also told them quite frankly, ‘We’ve got to make up the revenue. If we’re going to walk away from any part of this revenue, we have to find another source.’”
Leave a Comment:
2.3% tax to medical device folks
limiting how much a person/family can set aside of their own money for HSA (which is responsible)
an additional $63 per head fee in order to support Obamacare
What is going to come next?
I am not sure what all is included with medical devices, but if the scooters "call now for your free scooter, we will do the paperwork and medicare will pay for it", are covered, then it can't be a bad thing. Less of that kind of marketing can only help.
That's one example of why Medicare is in trouble. There are millions of scooters running around that were paid for by the tax payers. I qualify for one and really need one, but I refuse to pay the outrageous prices or pass the costs off to others. I have a recycled scooter that I refurbished myself. The medical device industry is making a killing with their scams. Have you ever had to purchase a pair of crutches? The costs are simply unbelievable.
I have used an old pair of crutches that have been in the family for years. Anytime anyone needs them, there they are. This is just for use while a bone is mending, not for long-term use. The scooters really aggravate me. You can't imagine how many people are whipping along the streets on their scooters in my town. If you really need one, then by all means get one. But there should be no need to advertise these things, if your doc thinks you need one, that is good. But just to call in and get one because medicare will pay for it is dumb. And maybe that is what they are trying to do, cut down on things that alot of people could do without and get by fine.
Fascinating! Even the Democrats are beginning to realize that there is no such thing as a free lunch. Someone, sometime, somewhere, has to pay for it. They keep harping about "tax the rich," but never define "rich." It won't be long before the so-called Middle Class finds out that THEY fit into the parameters defining what is considered "rich," so they will end up (as always) paying the lion's share of costs for everything.
Can someone explain to me why the Dems and Libbies keep trotting out the nonsense about the 1% paying their "fair share?" It has been proven over and over that, if you took ALL the assets of the 1%, it wouldn't even make a dent in the national debt. Is this a divide and conquer routine? Keep the American people fighting against themselves, so they leave the government alone? What about the large percentage that pays NOTHING?
One other thought - Obamacare drastically cuts the amount paid to doctors and medical institutions for their services. This will bring about two things - 1) many doctors and hospitals have already begun to refuse to accept patients without supplemental insurance, which, over time, will force just about everyone desiring decent medical care to buy supplemental insurance, and, 2) the effect of #1 will be to dramatically raise the cost of supplemental insurance premiums. Guess who will pay this increase? That's right - the patient. And, they want to cut your medical deduction on your income tax.
Any guesses as to why the creators of this abomination didn't have it take effect until AFTER the Presidential election? Think hard.
As previously stated in this forum - if you think medical care is expensive now, wait till you see what it costs when it's free!
I thought Obamacare was going to save money not cost money.
These lousy pigs were all for Obamacare until they found out what was in it. I hope everyone who voted for Obamacare rots in hell.
Welcome to the 21st century. I know it's painful but we will continue to drag you along kicking and screaming. It's for your own good. Just go with it!
i agree.. the democrats and obama can go straight to hell.. they hate america.. obama wants to destroy america
Takers, get your wallets out, more comrade obama taxes for you on the way???
But, but...... Dems are saying a tax will negatively impact jobs? Impossible, just impossible......
How can this be. These rich corporations are just being greedy, not wanting to pick up their fair share. Your leader says so. Have you missed the talking points? They've been distributed to all by the White House.
Where is all the Democrats and the Media --- if the Republicans raised taxes by 2.3 % they would all be raising heck, blaming Bush, Boehner, Congress for hitting the middle class with increased taxes. Also the democrats would have beat Romney over the head with this yet the Republicans well lets just say clueless.
Jeff -725167===The Republicans only have a majority in half of the Congress, the Democrats are holding all of the leverage plus the emperor in the White House. This is good in a way, this will bounce right back on the Democrats. They really don't care the next election is far away and they know the American People will forget about this. The American People sure forget a lot.
The medical device tax is not limited to just devices used by humans. It can also apply to vet devices, so your vet bill will go up for all you pet owners!
Anyone who thought about it for an instant saw that it was folly to "reduce health care costs by increasing taxes on devices used in [believe it or not] health care". D'oh
That the Democrats didn't understand this simple fact and voted for the bill in the first place is amazing.
This tax raises money by increasing medical costs and hence, what patients, insurers (who pass on costs to patients), Medicare (who passes on these costs to employees/ers), and Medicaid who passes on these costs to the taxpayer. How is that "reducing health care costs"? It's just hiding them for a few months.
Why did the Democrats wait until the last minute to begin to beg to remove those contrived constructs in the PPACA that were added to make it appear to balance? Oh, that's right, there was that little election last month and to point out the emperor had no clothes might have gotten these Democrats sent behind the woodshed and spanked out of their committee memberships and into basement offices.
Just repeal the whole thing and this time pass something that the legislators have actually read. To repeal it piece by piece until it's gutted is just a waste of everyone's time.
WhatsLegal===I wish a repeal would be possible but the messiah is still in office and a 2/3's vote is hard to come by. Mary Landrieu sold her vote for Obama-Care for a mear $300 Million Dollars only to have Obama break hios promise to her. Lovely people and she still backs Obama. Amazing Politics.
Further proof that this was a bad law to begin with, the law is chocked full of parts that will drive up costs. The Dems NEVER learn, you can't increase revenues simply by taxing everyone. The way to create the most revenue is by creating more jobs and business, and cutting costs.
By taxing the manufacturers, the users of the equipment (doctors, hospitals) will just pass the cost onto the insurance companies, who will then pass the cost increase in the form of higher premiums. THERE IS NO FREE LUNCH!
The best way to fix health care costs and to make it more affordable is to attack the CAUSES of the cost increases, like allowing interstate competition for health insurance, tort reform to reduce insurance costs to providers and reducing insurance & medicare/medicaid fraud. If these had been attacked first, these stupid tax increases from Obamacare could be avoided.
Everyone will see beginning in 2014 what damage Obamacare will do to both taxes AND medical costs. It should be repealed and replaced with legislation designed to first reduce the causes of cost increases while finding ways in the industry to pool risks to allow for more people to be covered. Only an idiot like Pelosi would pass a law like this saying, 'we'll find out whats in the law after we pass it'. The most irresponsible, moronic thing a lawmaker EVER said. Figures she's the leader of the Dems.
bizdoc===We don't have to wait until 2014 to see what is going to happen, it started back in 2010. To late to start to moan and groan now, Obama and the Democrats said that we needed this. No mater what we said or did they said we needed this and they forced it on us.
Medicare-Social Security are already seeing changes and cuts more to come and it will not be for the better it will be worse. You can't cut Social Security and Medicare by over $1.2 Trillion Dollars and say that the programs will be better. Just think as the Democrats and the Republicans deal on the end of the year taxes they both want to cut entitlements and that is also Social Security and Medicare. Obama-Care will not be cut it will be funded by the cuts.
Amazing now the same politicians that said we voted for tis mess now want less to do about the process. I smell an election coming soon and they are worried about keeping those fine jobs we gave them all.
No, do not water down the tax. The hit on jobs has already been factored in. And where are we going to get the revenue? I bet more cuts for "medical providers". The representatives have been lobbied effectively by their corporate constituents. Jobs threatened...capitulate. They are beginning to look like Republicans.
Let me put it this way. For years, continuing today, device reps make a tremendous living, often more than the docs that use their devices, plus they share in excellent stock deals. These companies have already laid off many of these workers in anticipation of the Tax. They have known about it since its inception. It isn't a surprise.
Frankly, these companies need to step up and help pay for their business instead of advertising on TV. And costs need to QUIT being shifted to Providers. Im tired of it!
Irrational gibberish!
stronghorse===Not really!!!
"Pass it so we can see what's in it" - don' t forget the $63 fee / year in addition - that's for EVERYONE !!
Well, maybe not for the moochers, takers and deadbeats of society.
To vote for a Democrat means higher taxes, less money in YOUR paycheck and less money in your pocket at the end of the year.
Democrats rely on the moochers, deadbeats and takers vote for them - add stupid people to that list.
"carefully designed"? LMFAO!
Let it rip!!! Obama and the Democrats wanted this Obama-Care Law to pass by all means, so let the taxing begin. The American People by the majority said do not pass this law and they disobeyed what the American People said. So let's go for it. Dick Durbin should have thought of these taxes before he voted for Obama-Care. Nancy Pelosi said let's pass it to see what's in it so they did just that. Now let Nancy go home and tell her rich friends that you are going to get hit by tax increases coming from two different taxing laws. Give it the Democrats they got what wanted, now let them run this country into the ground.
By all means let's go off the cliff too. Those taxes will come back to get us anyway. The payroll taxes are going up and so are a lot of other taxes come the New Year. Let's have a party and tax everyone for it. The Obama and the Democrats way of doing things, force it on you. Good now when the next election comes around maybe people will pay attention to what is going on.
This is only the very beginning. Even after they pass all the taxes to fund this outrageous junk Bill, it still will be underfunded. You can hear the ACA Bill sucking the soul out of this Nation from the surface of Mars.
There is one way to kill this mess. Each part of the ACA law must have approval for funding by Congress every year. It's part of the Bill. Get Congress to stop funding every aspect of this mess and hit the restart button.
It is just a little scary to think anybody thought this Bill/Law was ever viable.
Unbelievable hipocracy. They voted for it - and against their constituents, now live with it.
Guess the Dumbocrats should have read the bill. I did, all 2,500+ pages, and saw the new taxes and raises to the existing ones; plus the death panels (yep, there in there and if you're over 65 you're their target) that can deny health services to individuals and require their permission before certain procedures.
Hang in there Dumbocrats and liberal Republipukes, all will be reveiled a little at a time; just like a frog in water on the stove.
Unbelievable hipocracy, or maybe not so unbelievable. You voted for it - live with it. Sorry, those companies you hosed might not be able to contribute to your campaign next time around now that you've bankrupted them.
no do not take anything out .. the faster we fall as a country the faster we can rebuild after the damage has been done by obama and the rest of the democrats... if obama wants to destroy the country let him do it ..... i used to work hard but since democrats want to take i have decided to kick back and enjoy life more.. let them bring down america,,, who cares .. the game is already over...
"The delicate balance of tax increases and spending increases in Obamacare will work only if Congress allows the tax increases to take effect, so they can offset the cost of substantial new insurance subsidies and other Obamacare outlays.
But some Senate Democrats are trying to delay at least for one year the tax on medical device manufacturers, which will raise nearly $2 billion in new revenue in 2013 and $20 billion over the next seven years."
Solution: Delay the tax one year, then delay $2Billion in "substantial Obamacare outlays" for one year.
I haven't received a pay raise in three years. I haven't spent more in three years.
Next.
So basically, as usual, Democrats have no idea what they're doing and are tripping over the laws they pushed through the congress upon the rest of us. Typical liberal clusterf***k.
Increased taxes affects jobs and job growth. Since when? I thought higher taxes was the answer. Did somebody just wake up?
None of the Democrats that approved this bill would ever bring up the increased taxes that came with this bill. Not until it affected their districts and states.
The 3 D's...Dishonesty, Duplicity, Democrats.
Just like those sleazy, corrupt, corporate-loving democrats to stand in the way of fairly taxing those evil, profit-hungry corporations. Shame on them! LOL - If the republicans proposed this, Obama and Harry Reid would have their collective panties in a wad.
Here we Go again with Obamacare. I know that I am going to sound sarcastic, but what the hey. Now we have Democrats wanting to cut up Obamacare. No politician Democrat or Republican likes to see a program that is going to hit them in the pocketbook or voting booth. There is an alternative to Obamacare. It is called the one payer system or better known as Medicare. Why not Medicare for everybody that will get rid of all the greedy Insurance Companies selling Health Insurance. Nobody will have to worry about finding a Doctor or Hospital or Pharmacy that accepts Medicare, because Medicare will be the only Health Insurance, and they will not be able to collect from the people, because they will not have the money to pay them. As the old saying goes you cannot get money from a turnip. Everybody just stop and think what the alternative is.