Saturday, February 15, 2014

GOP to Impose Huge Tax Increase in their Health Care Reform Plan

Want to know how to argue against Republican opposition to the Affordable Care Act? Turn the tables on them with their own incredibly costly plan that includes shifting the burden to and me. Another gift to business.

After reading through a number of conservative articles critiquing their own parties plans, something Democrats better start doing, I found it a treasure trove of talking points that would kill them in political ads this midterm.

Simply, their plan in some ways repackages ObamaCare, while putting in place everything that made the individual market deadly and unaffordable. And they need one thing to happen; free market competition must lower costs. Anyone want to roll the dice on that pipe dream?
Forbes: There has been a kind of intellectual laziness, a belief that there’s no need for critics to come up with better reforms, because Obamacare will “collapse under its own weight,” relieving them of that responsibility ... it’s not going to collapse. And that makes the development of a credible, market-oriented health-reform agenda more urgent than ever.

The Republican Study Committee put out a plan last fall that would replace Obamacare by capping the employer tax exclusion, and making a standard deduction for health coverage available to everyone. A similar plan proposed by George W. Bush in 2007 would have expanded coverage by 11 million ... Obamacare aims to expand coverage by 30 million, not 11 million. And so a replace plan in 2017 will have to contend with the fact that it is likely to throw people off of their existing, ACA insurance. 
The following includes what we have now; keeping your insurance alive to avoid getting rejected for pre-existing conditions and "high risk pools" paid for by taxpayers so insurers can make higher profits. And instead reducing medical errors, the GOP would reduce malpractice settlements to victims. Oh yea, it's grows the deficit and spends more:
The new Coburn-Burr-Hatch proposal, called the Patient Choice, Affordability, Responsibility, and Empowerment Act (“Patient CARE Act”) wouldn't maintain ObamaCare’s individual mandate, nor its requirement that insurers offer coverage to everyone regardless of pre-existing health conditions. This structure ... described as a “repeal and replace” ... is remarkably similar to the one that Obamacare uses. What are the key differences? The CBH plan would grow its subsidies and tax exclusion cap at a higher rate than Obamacare does—CPI+1% vs. CPI+0% for Obamacare ... the CBH plan would spend more on subsidies, and recoup less in revenues, than Obamacare does. It won’t satisfy the purest Obamacare haters ... And it won’t drastically shrink the scale and scope of federal spending on health care, at least in the near term.
Here comes deregulation, and the fantasy that health care is a consumer product:
Deregulate ... a process that is likely to make health insurance less costly over time. If health insurance is less costly, then federal spending on health insurance can shrink alongside.
Except the Coburn-Burr-Hatch plan (read it here) amounts to a big tax increase. The main way that it remains budget neutral is by making employer provided health insurance plans, which are currently not taxed, partially taxable as income. In fact, this income replaces income that, under ObamaCare, comes from taxing companies, including the tax on medical device companies paid by firms like Medtronic MDT -0.62% and Stryker SYK +0.15%. This fact has not escaped the notice of some prominent health reform allies. 

“It is a huge tax increase on workers without any confidence that they will be able to afford health insurance in the future,” says Bob Kocher, a partner at venture capital firm Venrock who previously worked in the Obama administration.

It is “essentially a very large Republican tax increase,” says Ezekiel Emanuel, the Diane V.S. Levy and Robert M. Levy University Professor of Medical Ethics and Health Policyat the University of Pennsylvania and another former Obama advisor. “It’s quite clear the plan is to put a bigger burden on middle class Americans.”

How big a tax might this be for an average American family? Ezekiel has some numbers. 
The average employer health plan for a family of four costs $16,351, according to the Kaiser Family Foundation, and the employer covers 72% of that, or $11,772. Thirty-five percent of $11,772 is $4,120.35. The employee’s share of the Social Security and Medicare payroll tax is 7.65%, or $315.21. Assuming this family of four is in the 25% marginal income tax bracket, that would add another $1,030.09, for a total tax increase of $1,345. (For more from Emanuel, see this Times piece.
Removing a bunch of corporate taxes so that the middle class can pay more seems like a political non-starter, even given the public backlash against Obamacare. This plan would likely mean that more people would lose insurance, or be forced to go to smaller networks of doctors. Those are the same criticisms levied against the Affordable Care Act.

What the plan does emphasize is the degree to which any plan to reform the insurance system can seem like a zero-sum game – the money has to come from somewhere. 

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