How Democrats will pay for health reform – Mar. 18, 2010.
Here are some excepts:
The whole package will cost $940 billion over 10 years to provide expanded insurance coverage, according to the CBO forecast. In addition, the new plan could reduce the deficit by $138 billion over the first 10 years — $20 billion more than the Senate bill.
Ralph’s Note: This $138 billion reduction includes the profit which the administration will make by taking over the student loan program
The estimated long-term deficit reduction comes mainly from more than $500 billion in savings from health programs like Medicare, and $438 billion in new tax revenue.
Ralph’s note: The number of people on medicare will increase by 36% over the next 10 years, yet they will cut $500 billion from Medicare funding
The reconciliation bill’s changes to the Medicare tax represent the largest single revenue raiser in the health reform package.
The CBO estimates the provision would raise $210 billion over 10 years.
Currently, the Medicare payroll tax is 2.9% on all wages — with the worker and his employer each paying 1.45%.
Ralph’s note: There are naturally going to be tax increases. Until this bill passes abortions were never funded through federal tax dollars.
Tax high-cost medical plans: The new bill still includes an excise tax on insurers offering high-cost health insurance policies.
But it is considerably weakened from the Senate bill, after objections from unions and others. Fiscal hawks have been arguing for a stronger excise tax since they believe it has the best chance of curbing the growth in health costs, which is a main goal of health reform.
Ralph’s note: If you have a really good health plan and you do not belong to a union, you will have to pay extra taxes on that health plan. I think the tax is 40% or something like that.
Once employers spend less money on health care, they will use the money saved to pay workers higher wages, or so the economic theory goes. The workers will then owe income tax on those higher wages, providing revenue to help pay for health reform.
Ralph’s note: They want to encourage employers to offer cheaper health plans, and they think that they will raise workers’ pay as well as paying increased cost of health plans and the increased taxes.
Penalties for those who don’t get coverage: Like the Senate bill, the reconciliation bill would impose a financial penalty on most Americans who don’t buy health insurance.
Come 2015, individuals who choose not to buy insurance would pay the greater of $325 or up to 2% in income ($695 or up to 2.5% in income thereafter).
Ralph’s note: If you don’t pay for coverage, you can simply pay a penalty instead. The IRS will be the one to monitor compliance with the law.
Require employers to pay if they don’t provide coverage: Like the Senate bill, the reconciliation bill would assess a penalty on employers with more than 50 workers if they do not provide health insurance coverage and have workers who would qualify for federal subsidies to buy insurance on their own. But the reconciliation bill ups the penalty from $750 per full-time worker to $2,000.
Ralph’s note: If you work for a company with more than 50 employees your employer may have to pay as well as your own penalty. I don’t think they will rais your pay if both they and you are paying fines for non compliance.
Impose new fees on the health industry: The reconciliation bill would impose new fees on health care companies such as drug makers, medical device makers and insurers. The fees would be in exchange for the new business that will come their way as a result of the expected influx of Americans who will obtain health coverage and use more medical services.
The CBO estimates this provision would raise $107 billion over 10 years.
Ralph’s note: I’m not sure how new fees will reduce the costs of healthcare?
Trim various health-related tax breaks: The reconciliation bill would impose an additional 20% penalty for non-health withdrawals from tax-advantaged health savings accounts, up from 10% in the Senate bill.
It would limit to $2,500 the amount workers may contribute to flexible health spending accounts at work. It would also increase how much the non-elderly and the non-disabled would have to rack up in medical bills before being allowed to deduct expenses above that amount on their federal income tax return.
Plus, it would make it harder to deduct medical expenses by raising the percentage of adjusted gross income that would have to be matched in health bills before being allowed to deduct any further medical expenses. The floor would be raised to 10% from 7.5% for those under 65.
Ralph’s note: Looks like more new fees and taxes. Again, making companies and individuals pay more fees and taxes, I still don’t get how this will decrease costs.
Create a new long-term care insurance program: The bill would create the Community Living Assistance Services and Supports Act to help seniors in need of help with daily tasks such as bathing and dressing. Those who enroll in the program would have to pay premiums into the program for five years before being eligible for benefits.
In the first 10 years, the program it is expected to take in more money than it pays out, which is why the CBO says it would reduce the deficit by $70 billion. But in the second decade and beyond, the program is projected to pay out more than it takes in, and will therefore contribute to the deficit.
That’s why some say that the CLASS Act is a budget gimmick that will not contribute to the potential of health reform to reduce the deficit.
Ralph’s note: Wow, would you buy insurance that said you could not claim for the first 5 years? This would be illegal to do for private insurance, luckily government insurance does not have the same restrictions, so collecting premiums for 5 years before paying a single claim is a GREAT way to make money!