Wednesday, July 15, 2009

An Awful Proposal from the House

So, a few questions for the House Democrats and the president concerning yesterday's House proposal to raise taxes on rich folks and the upper middle class to pay for healthcare reform:

1. Mr. President, you said, in praising the proposal, that it "will lower costs, provide better care for patients and ensure fair treatment of consumers." Why does something that will lower costs require the raising, by House estimates, of "more than $1.2 trillion over the next decade." Something that lowers costs makes it cheaper, no?

2. The new "surtax" combined with the expected expiration next year of the Bush tax cuts, will push the highest federal tax rate to 45 percent. Add state and local taxes, and some people will now be paying most of what they earn to the government. Is that what you meant by "fair treatment"?

Read more

3. The new tax hikes would affect 2.1 million taxpayers, according to the Tax Policy Center. The money raised would be used to cover 37 million uninsured Americans. That means that EACH of the 2.1 million Americans will be, in essence, paying for the healthcare of almost 18 people. Is THAT what you meant by "fair treatment"?

4. The House bill would require everyone to carry insurance coverage, offering tax credits to people making as much as 400% of the federal poverty level -- $43,000/year for an indivdual. The penalty for noncompliance is 2.5% of income. So a young, healthy, self-employed person making $43,001 a year would pay a penalty of $1,075 for not buying coverage. On the individual insurance market, such a person would expect to pay between $2,200 and $3,200 yearly for low- or no-deductible coverage. He would get none of the rich people's money. Given the choice to pay the $1,075 penalty or two or three times as much for coverage he would probably rarely need, which do you think he would choose?

This House plan is not likely to pass. The Senate isn't interested. But the Senate has its own bad ideas. The only good idea on health reform that I've heard is from Sen. Ron Wyden, an Oregon Democrat. See my columns on the subject here and here

Currently, his proposal is being ignored, perhaps because Republicans have belatedly said they could get behind it. (Where were they three years ago?) Maybe we'll get lucky: The House and Senate will fail to agree on a plan, or that whatever they agree on will be distateful enough to moderates in the Senate to sustain a filibuster. Then, next year, maybe they can get it right.

1 comment:

  1. Nationalize health care= 7% payroll tax (lower than current levels) and 2% added to personal income tax (less than most families spend a year in copays, deductibles, employee share of insurance at work) and it's all paid for! No billions for the insurance company stockholders and executives, a few less billion for pharma. It can work. It's the only way. Read the facts at