The unintended consequence of this reduction in spending power on American workers is a shift in spending from non-medical consumption to medical consumption. This will translate into a negative impact on spending for consumer items needed to help support the tepid American economic recovery.
The impact of this increased premium on the employer is equally devastating. The employer will bear $2,700 of the increased premium per employee. That means the direct cost of his labor increases 7 percent! If the business has 100 employees, this will cost the business $270,000. The increased cost will either come out of profits, in which case the employer will have less to invest in his business to create additional jobs; or it will be passed on to consumers in the form of higher prices, which will result in less consumption.
In either event, the increased premium costs will have a negative impact on the country’s fragile economic recovery.
The long-term economic impact of ObamaCare is even more ominous. No evidence or analysis thus far shows that ObamaCare will reduce the cost of medical cost in the U.S. All the evidence is to the contrary. Consequently, companies are expecting premium costs per employee to skyrocket. This will further reduce the competitiveness of American labor. Companies will have less money to invest in their American businesses, thereby creating even fewer jobs. Companies that have the option will decide to set up new production in lower cost countries with more competitive labor and medical costs.
Hidden in the bowels of the health care reform bill is a 3.8 percent sales tax on home sales beginning in 2013. The tax experts are not yet certain how this tax will work because it was not publicly discussed in Congress prior to the passage of the Health Care Reform Act. Did you hear the pundits discuss it? In principle this tax applies only to wealthy individuals with profits in excess of $250,000 (single taxpayer) or $500,000 (joint taxpayers) from the sale of their primary residence. However it also appears to apply to profits on second homes and residential investments. This tax will have a major impact on upper middle income baby boomers living in high cost metropolitan areas who want to downsize from their long held large family home. This tax will certainly have a chilling impact on the nation’s morbid housing market.
If middle-class Americans think they will escape this tax, think again. At some point in the near future, inflation from the Federal Reserve printing money to finance the president’s huge budget deficits will drive up the nominal price of housing. Even modest three-bedroom homes will sell for big nominal dollars. At that point the middle class will be ensnared with the tax. Look at history. The income tax was originally sold to the American people as only taxing the top 2 percent!
Pelosi may have unintentionally taught Congress and the American people a lesson. Read a bill and understand the impact of the bill before you pass it. It is unlikely that the Democrat-controlled Congress wanted to pass a medical reform bill that kills jobs and impedes the country from recovering from the Great Recession. Unfortunately, in its haste to control 20 percent of the economy represented by health care, it has passed a “Jobs Reduction Act.”