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March 17, 2013

Obamacare Taxes UVa, Depleting Anticipated Savings

Chief Justice Roberts, with the four liberal justices in tow, upheld Obamacare only because it was (or could be construed as) a tax, not a penalty.

Try telling that to the University of Virginia or the editors of the Charlottesville Daily Progress, whose lead article March 14, under the big, bold headline "'Obamacare' to swallow UVa's savings as insurance audit continues," begins: "The national health-care plan likely will gobble up money the University of Virginia hoped to save as auditors review its health-care plan."

The "savings" in question had been expected to come from the auditors' discovery of "$1.8 million wasted annually on ineligible dependents," such as divorced spouses or children who have "outgrown" the 26 year old limit for staying on the Univeristy plan. But instead of saving $1.8 million annually, the Daily Progress reports, "the university has to divert its savings to foot the roughly $7-million bill for the Affordable Care Act's new employer penalties, said Susan Carkeek, vice president and chief human resources officer at UVa."

Ms. Carkeek, shrewd money manager that she must be, tried vainly to explain that those savings, though not being actually saved, would neverthless be useful. "We're expecting fairly significant cost implications from the Affordable Care Act that pass on new penalties and charges, fees to employers -- probably in the order of $7 million a year," she explained to an interviewer from a state watchdog organization, "So this will help us offset future cost increases."

Carkeek further explained that the University pays 70% of the cost of its health plans; its employees pay 30%; and state taxpayers fund 30% of the University's 70% share.

Perhaps everyone involved is mistaken to think of that $7 million as a penalty and not a tax, but I suspect all -- especially the taxpayers, if they ever pay attention -- will agree that it is indeed a "fairly significant cost implication."

In the 2012 election President Obama won 76% of the vote in Charlottesville, second only to the City of Richmond (by about 1%) as the president's biggest margin anywhere in the state. Now that chicken is coming home to roost.

 

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