As it now stands, the health care reform plan proposed by Democrats and the Obama administration (the Baucus Bill) would not only fail to reduce the cost burden on middle-class families, it would make that burden significantly worse, says Douglas Holtz-Eakin, former director of the Congressional Budget Office (CBO).
For example:
- The bill would impose nearly $400 billion in new taxes and fees.
- Nearly 90 percent of that burden will be shouldered by those making $200,000 or less.
- It might not appear that way at first, because the dollars are collected via a 40 percent tax on sales by insurers of "Cadillac" policies, fees on health insurers, drug companies and device manufacturers, and an assortment of odds and ends.
The economics are clear:
- These costs will be passed on to consumers by either directly raising insurance premiums, or by fueling higher health care costs that inevitably lead to higher premiums.
- Consumers will pay the excise tax on high-cost plans; the Joint Committee on Taxation indicates that 87 percent of the burden would fall on Americans making less than $200,000, and more than half on those earning under $100,000.
Industry fees are even worse because Democrats chose to make these fees nondeductible, explains Holtz-Eakin:
- This means that insurance companies will have to raise premiums significantly just to break even. American families will bear a burden even greater than the $130 billion in fees that the bill intends to collect.
- Premiums will rise by as much as $200 billion over the next 10 years -- and 90 percent will again fall on the middle class.
Senate Democrats are also erecting new barriers to middle-class ascent:
- A family of four making $54,000 would pay $4,800 for health insurance, with the remainder coming from subsidies.
- If they work harder and raise their income to $66,000, their cost of insurance rises by $2,800.
- In other words, earning another $12,000 raises their bill by $2,800 -- a marginal tax rate of 23 percent.
- Double-digit increases in effective tax rates will have detrimental effects on the incentives of millions of Americans.
Source: Douglas Holtz-Eakin, "The Baucus Bill is a Tax Bill," The Wall Street Journal, October 13, 2009
For text:
http://online.wsj.com/article/SB10001424052748704107204574471292249934348.html
For more on Health Issues:
http://www.ncpa.org/sub/dpd/index.php?Article_Category=16
Senators and Doctors Speak Out on Fraud and Dishonesty in Baucus Bill
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