Will sales tax make Obamacare less affordable?


The Affordable Care Act (aka: ACA or “Obamacare”) became law in 2010, but most consumers and businesses won’t notice any real cost and service impacts until January 2014. This quickly approaching deadline has brought increasing scrutiny to how the law is funded and who will ultimately pay. Those in favor of Obamacare, argue that costs will be evenly distributed between the government, private sector, and consumers. Those against it criticize the taxes used to fund it as too high and unfairly aimed at the private sector.

Many are unaware that in addition to raising taxes on providers, manufacturers, and insurance companies, the ACA also levvies a hefty sales tax on the purchase of health insurance. The Congressional Budget Office (CBO) argues that this health insurance sales tax will likely be “passed through to consumers in the form of higher premiums.”

The purported benefits of Obamacare include: access to free preventative care, coverage of pre-existing conditions, and guaranteed coverage for essential benefits such as pediatric dental care and maternity services. Whether small businesses and consumers will view these results as worthy of their increased tax burden remains to be seen.

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