Wednesday, March 31, 2010

There is a quiet anger boiling in America

Anyone who ignores the growing anger in this country is like an ostrich who puts its head in the sand to avoid the truth.

Sure, go ahead and deny it, put your hands over your ears, like a child, and scream: Nah nah nah nah i can't hear you nah nah nah.

There is a quiet anger boiling in America ... among millions of hard-working citizens who pay their bills, send in their income taxes, maintain their homes and repay their mortgage loans -- and see their government reward those who do not.

Outrage and Unsustainable: Government compassion 145% more than private sector for same job

From 1998 to 2008, compensation for government employees grew by 28.6%. Unfortunately the same cannot be said for the private sector. The increase there was 19.3%. The Wall Street Journal points out those government workers earn $1.45 for every dollar you earn doing the same exact job in a private business - a business that is forced to pay taxes and compete for customers.

The Boston Herald points to a local example of this mentality. In Salem, Massachusetts 45 city government employees earn over $100,000. That is up from 34 people who earned that amount just two years ago. Keep in mind that the median household income in Salem is less than $60,000. But those government workers "could pass out drunk in front of a supervisor and still be on the payroll."

Liberty vs. Serfdom aka Obamacare

I just don't trust lawyers for anything, especially healthcare...

Tuesday, March 30, 2010

Told you so

Here's an interview with Aetna's CEO Ron Williams. He says that insurance premiums are going to go up thanks to new taxes and mandates imposed by Obamacare.

Washington Examiner: Virginia’s ‘Tax Me More Fund’ is a big flop

Virginia's 'Tax Me More Fund' is a big flop

By: Barbara Hollingsworth
Local Opinion Editor
03/29/10 3:42 PM EDT

When Virginia Delegate Kirkland Cox, R-Colonial Heights, set up the "Tax Me More Fund" in 2002, he did it to make a point: Those complaining the most loudly about spending "cuts" in Richmond could put their own money where their mouth was and make a voluntary contribution to the state.

Last year - to supplement a $74 billion 2008-10 biennial state budget – they did just that. Total collected: $1,500, according to the Virginia Department of Taxation.

That's better than pre-recession 2006, when just $19.36 was donated, In fact, since 2002, the fund has collected a grand total of just $12,887.04, which doesn't even pay the salary of one part-time state employee.

I guess that means Virginians think they're already taxed quite enough.



Read more at the Washington Examiner

AP: Too late? AP Finally Notices That Obamacare Will Worsen Doctor Shortage

Why didn't the AP cover this a few weeks ago when it would have done some good? Back when we were saying, "You know, adding millions of patients to the system while driving thousands of doctors out of the system may not be a really good idea." 

AP: Primary care physicians already are in short supply in parts of the country, and the landmark health overhaul that will bring them millions more newly insured patients in the next few years promises extra strain. ... Recently published reports predict a shortfall of roughly 40,000 primary care doctors over the next decade.

billy_dfc.gif

Under ObamaCare, your quality of care will diminish somewhat and your taxes will go up a lot.

 DFC

Fairy Tales: Read me the part where ObamaCare lowers the deficit again

fairy_stories_dfc.gif

Can they count in Washington D.C.?

http://www.nytimes.com/2010/03/21/opinion/21holtz-eakin.html

Op-Ed Contributor - The Real Arithmetic of Health Care Reform - NYTimes.com
Take away the budgetary gimmicks and games, and it's clear that health care reform raises, not lowers, federal deficits.

Monday, March 29, 2010

Take a picture, kids. Touching a right-wing book is as bipartisan as I get.

Posted by Kevin

This week's Weekend Caption Contest™ was another monster hit. There were many excellent entries, so many that I could not honor them all. Anyway, the assignment this week was to caption the following picture:


U.S. President Barack Obama holds up books by former Republican presidential candidate Mitt Romney and President George W. Bush's political strategist Karl Rove (L) as he shops for books for his daughters Sasha and Malia at Prairie Lights book store in Iowa City, March 25, 2010. REUTERS/Jason Reed (UNITED STATES - Tags: POLITICS)


Here are the winning entries:

1) (IowaRight) - "The bookstore clerk did the best he could. He had never been asked for do-it-yourself books on how to run a country before..."

2) (tomg51) - "This is it? You're out of Palin? You've got to be kidding."

3) (Peter F.) - "Take a picture, kids. Touching a right-wing book is as bipartisan as I get."

4) (Jeff Blogworthy) - "Add these to the burn list."

5) (sarahconnor2) - "Too bad he's not picking up some books in the diplomacy and etiquette department."

6) (guido) - "Haha, these idiots actually wrote these themselves!"

The Readers Choice Award this week went IowaRight's winning entry. In its place we recognize the next highest vote getter:

(iwogisdead) - "President Obama is shown holding two bricks which were thrown through windows at the Democratic National Headquarters by Republicans. Except they weren't "bricks," but were "books." And they weren't thrown, but were delivered in boxes. And they weren't at the Democratic National Headquarters, but at a bookstore. The White House has denounced this act of Domestic Terrorism."

That's all for this weekend. A new edition of the Wizbang Weekend Caption Contest™ will debut Friday morning.

Rating: 5/5 (7 votes cast)


California scraps stupid reflective coating rule that would increase fuel consumption.

It's a good thing that they scrapped this ridiculous regulation and mandate on auto manufacturers. Not only would it hurt the economy, but it was also another instance of government treading on our liberties.

But I simply contend that it wouldn't have helped reduce fuel consumption at all.

Let's say it's the middle of winter, and the car now reflects most radiation. Wouldn't that cause fuel consumption to go up! Simply because the heater has to work harder to heat the car, thus consuming more fuel?

Stupid, that's what liberals are - just plain stupid.

-------

unday, March 28, 2010

Sanity! California scraps moonbat 'cool cars' regulation

No shortage of moonbattery in California, which has targeted everything from plasma TVs (now banned), to the color of cars (California: stop global warming by making black cars illegal!). On the national level, California politicians in the U.S. House want to impose their moonbat tech on the entire nation: Save Us From Global Warming - Make Everything Chrome. Because - you know - the economy is so strong right now that milking the private sector for money won't be a big deal. In a time of economic calamity in California, they were focusing instead on regulations that will hurt private industry and destroy jobs to fight a perceived problem that doesn't exist. The proposed regulation was to coat all car windows with UV-reflecting glaze. Any electromagnetic radiation impinging upon a surface can do only one of 3 things: 1) pass through (transmitted), 2) be absorbed by the surface, or 3) be reflected by said surface.

The UV glaze will reflect more of the UV so as to heat the car less, and thereby save the planet from global warming or something. Unfortunately, it will also partially reflect cell phone signals. Can't make an omelet without breaking a few eggs you know. The effort will cost more than it's worth (not to mention the environmental impact of manufacturing the glaze), and consumers will not recoup the extra cost of the glazing in less air conditioning usage. But hey - it was for a good cause: good liberal intentions. Fortunately, moonbats actually showed a small modicum of reason in scrapping the proposed regulation. From The Detroit News: California scraps 'cool cars' rules. The big reason for the regulation being overturned before it was set to be finalized in May 2010 was that law enforcement (The California Police Chiefs Association, California State Sheriffs Association, Crime Victims United of California, among others) complained not only of the cell phone signal degradation, but the signal from ankle-bracelet monitors that felons wear. Also, the signal from EZ-Pass transmitters would also have degraded leading to possible logjams on freeways.
California scrapped its "cool cars" rules Thursday, a victory for automakers who had opposed the new requirements.

Under pressure from law enforcement in the state and others, the California Air Resources Board canceled the regulations that were adopted in June and set to be finalized by May 7. The plan aimed to sharply reduce heat in vehicles to in turn lower greenhouse gas emissions.

In a statement, the board noted many groups had raised issues involving performance of electronic devices and public safety. "Instead, the board will pursue a performance-based approach as part of its vehicle climate change program," the board said.
Good grief - so that's not the end of it? Do these people not have other things to do like get the economy going again in California? If California's state budget is so large that they spare change to fund these busy-bodies that only think of ways to kill the economy, then I have at least one cut to suggest that will surely pay for itself.

A threat to our nation: The growing gap between public and private sector pay

From the Wall Street Journal:

"According to the U.S. Bureau of Labor Statistics (BLS), from 1998 to 2008 public employee compensation grew by 28.6%, compared with 19.3% for private workers. In the recession year of 2009, with almost no inflation and record budget deficits, more than half the states awarded pay raises to their employees. [...]

"By the way, nearly this entire benefits gap is accounted for by unionized public employees. Nonunion public employees are paid roughly what private workers receive. What if government workers earned the average of what private workers earn? States and localities would save $339 billion a year from their more than $2.1 trillion budgets. These savings are larger than the combined estimated deficits for 2010 and 2011 of every state in America." [...]

These stark statistics bring to light contracts that are a testament to successful efforts by unions and a relic of a different economy where people did not noticed the discrepancy quite so much. That's not the case anymore. The Economist shed light on this last month. New York finds itself on the brink.  California too. The Wall Street Journal continues:

"So if your state is broke, this is a major reason. Eventually, governors, state legislators and city council members are going to have to decide whether protecting America's privileged class of government workers is a higher priority than funding such core functions of government as public safety. Something has to give. It's time to close the biggest pay gap in America."


Thursday, March 25, 2010

Chart: Economic history linked to political fortunes

March 2010 - Market still far from it's peak, but recovering. Jobs, however, are still not to be had, and unemployment remains at 10%, real unemployment is 17%

March 2009 - Those 'rich' able to sell in the last 6 or 7 months had taken enough profit, and sufficient jobs had be sliced (10% unemployment) to warrant putting some capital back into the markets. Don't feel that those 'rich' had somehow made out, because they were cutting their losses. They would have preferred the market to stay where it was.

Sep 2008 - When it became eminently apparent Obama would win the presidency, stocks began to plummet. Remember that the Stock Market is a forward looking predictive tool.

2003 - Bush tax cuts take effect, reverses market up to 2007 when Democrats take the House of Representatives and Senate.

9/11 2001 - Stocks plummet

Jan, 2001 - Bush wins presidency. It was not apparent, because the vote was very tight, and recounts take several months.




What else can the Democrat Socialists Mandate?

If they can mandate each and every individual purchase government health insurance, under penalty of law, then why can't they also force us to buy:
  • $2,500 in fresh fruits and vegetables a year, even if you don't eat them.
  • A sewer system to replace all septic systems (oh, wait, they already did that to me at a cost of over $12,000)
  • Expensive Florescent bulbs with toxic mercury (oh, wait, they've done that already, via banning incandescent ones!)
  • Public school property tax (oh, wait, that's already done in many states; or pay twice to send your kids to private)
  • Everyone MUST buy a trigger lock for a gun (even if they don't own a gun!)
  • Everyone pay 40% more to heat or cool their home (oh, wait, Cap 'n Tax will accomplish that with Carbon credits and mandates!)


The mandate is front and center in the constitutional challenges to Obamacare's requirement that everyone purchase health insurance or suffer penalties.

I've been posting about the mandate since last summer, since the mandate for the first time punishes and taxes the failure to engage in economic activity.

Although Obama opposed a mandate during the campaign, it should not be a terrible surprise that he would trumpet a lawrequiring people to engage in economic activity he deemed central to his overall health care plans:
Barack Obama will require you to work. He is going to demand that you shed your cynicism. That you put down your divisions. That you come out of your isolation, that you move out of your comfort zones. That you push yourselves to be better. And that you engage. Barack will never allow you to go back to your lives as usual, uninvolved, uninformed.
Whether such a mandate is constitutional is the subject of another good discussion at Volokh Conspiracy, this time fromDavid Kopel (h/t Instapundit), Is the tax power infinite?:
I've been posting about the mandate since last summer, since the mandate for the first time punishes and taxes the failure to engage in economic activity.

Although Obama opposed a mandate during the campaign, it should not be a terrible surprise that he would trumpet a lawrequiring people to engage in economic activity he deemed central to his overall health care plans:
Barack Obama will require you to work. He is going to demand that you shed your cynicism. That you put down your divisions. That you come out of your isolation, that you move out of your comfort zones. That you push yourselves to be better. And that you engage. Barack will never allow you to go back to your lives as usual, uninvolved, uninformed.
Whether such a mandate is constitutional is the subject of another good discussion at Volokh Conspiracy, this time fromDavid Kopel (h/t Instapundit), Is the tax power infinite?:
Although Obama opposed a mandate during the campaign, it should not be a terrible surprise that he would trumpet a lawrequiring people to engage in economic activity he deemed central to his overall health care plans:
Barack Obama will require you to work. He is going to demand that you shed your cynicism. That you put down your divisions. That you come out of your isolation, that you move out of your comfort zones. That you push yourselves to be better. And that you engage. Barack will never allow you to go back to your lives as usual, uninvolved, uninformed.
Whether such a mandate is constitutional is the subject of another good discussion at Volokh Conspiracy, this time fromDavid Kopel (h/t Instapundit), Is the tax power infinite?:

Unconstitutional Mandate to purchase something that we may never use, and may not want

Professor Jacobson,

Thank you for posting these words from Michelle Obama:

"Barack Obama will require you to work. He is going to demand that you shed your cynicism. That you put down your divisions. That you come out of your isolation, that you move out of your comfort zones. That you push yourselves to be better. And that you engage. Barack will never allow you to go back to your lives as usual, uninvolved, uninformed."

I read them today in a new light.

She's right, but not in the way she meant.

None of us will ever go back to our lives as usual, uninvolved, uninformed.

Give me liberty or give me death.

DavidD

_____________

Wednesday, March 24, 2010

SF: Whoops! ObamaCare Doesn't Cover Pre-Existing Conditions After All, Until 2014

Whoops! ObamaCare doesn't cover pre-existing conditions after all, until 2014

By: David Freddoso
Online Opinion Editor
03/24/10 8:28 AM PDT

ObamaCare will not protect children with pre-existing health conditions from being denied health coverage -- not until 2014. This despite endless talking points and promises to the contrary, the Associated Press reports:

Under the new law, insurance companies still would be able to refuse new coverage to children because of a pre-existing medical problem, said Karen Lightfoot, spokeswoman for the House Energy and Commerce Committee, one of the main congressional panels that wrote the bill Obama signed into law Tuesday...

Full protection for children would not come until 2014, said Kate Cyrul, a spokeswoman for the Senate Health, Education, Labor and Pensions Committee, another panel that authored the legislation. That's the same year when insurance companies could no longer deny coverage to any person on account of health problems.

Obama's public statements have conveyed the impression that the new protections for kids were more sweeping and straightforward.

He hasn't just "conveyed the impression." He's said it outright, repeatedly. Sen. Dick Durbin, D-Ill., was saying it on television as recently as three hours ago. MSNBC's Joe Scarborough, while criticizing ObamaCare, was saying this morning that he's still glad it would allow his diabetic son to get insurance if he lost his job.

Sorry, but not so fast.

This, as Vice President Biden might say, is a big f***ing deal. It means that in their rush to pass the Senate version of ObamaCare on Christmas Eve, Democrats disarmed one of their main talking points in defense of the legislation for the rest of this year.



Read more at the San Francisco Examiner: 

two new polls showing the American people are strongly against the health care plan

I'm not sure where you got your poll information, but this is the real polling, and it is distributed across many polling organizations and news outlets...

--------

Another day, two new polls showing the American people are strongly against the health care plan President Barack Obama will sign into law today. According to CNN, 59% of Americans oppose President Obama's plan. And according to CBS News, 48% of Americans oppose the plan (with 33% in strong opposition) compared to only 37% who support it (with only 13% in strong support). Digging deeper into the CBS poll, we find that 76% of Americans disapprove of how Congress is handling its job on health care, 46% think Congress has spent too much time on health care, and 49% believe the rules and procedures used in Congress to get the current health care bill passed have been mostly unfair.

But the leftist majorities in Congress just do not care what the American people think. Today, the Senate will press forward with work on the proposed "fix-it" bill through the reconciliation process. You may have thought it was impossible to make the policy and process of Obamacare even worse, but that is exactly what this reconciliation bill does:

Abuse of Process: According to the Congressional Research Service, 19 reconciliation measures have been enacted into law since the procedure's first use in the Carter administration. The record shows that reconciliation has been used for virtually all imaginable scenarios — save one: There is no precedent for using it to enact a once-in-a-generation rewrite of the relationship between Americans and their government that appeals exclusively to one side of the aisle. But that is exactly what Majority Leader Harry Reid (D-NV) is attempting to do. According to the latest NBC News/Wall Street Journal poll, a plurality of the American people strongly oppose this procedural tactic for this highly unpopular policy.

Even Higher Deficits: According to the Congressional Budget Office, new entitlement spending in the reconciliation bill would cost $216 billion in 2019 alone and will increase by 8% every year after that. Now, the Democrats will tell you that the CBO has also said their plan raises enough taxes and cuts enough Medicare to pay for this gigantic new entitlement. But the CBO is obligated by law to believe whatever Congress tells them. The American people are not. According to the latest NBC/WSJ poll, 76% of the American people do not trust Congress. That is why, according to the latest CNN poll, 70% of the American people believe Obamacare will cause the federal budget deficit to go up.

Even Higher Taxes on Business: As bad as the employer mandates in the Senate health bill were, the taxes on businesses in the reconciliation bill are even worse. Companies that hire certain low-income Americans will have to pay $3,000 per employee, per year, even if the company offers insurance. And companies that employ 50 or more workers will face higher tax penalties to the tune of $2,000 per full-time employee.

New Taxes on Investments: Investment is what creates job growth. One would think at a time of 9.7% unemployment, the government would not want to increase taxes on investment. Not this leftist government. The reconciliation bill slaps a 3.8% tax on investment income.

Cornhusker Kickbacks for All: You may have heard that the reconciliation bill "got rid of" the Cornhusker Kickback. That is not quite true. What it really did is extend the additional Medicaid funding Nebraska got to every state. But to keep the new entitlement spending deficit neutral, the new Medicaid funding creates a fiscal time bomb for states by vastly cutting Medicaid reimbursements in 2015. This reconciliation will only further strain already bankrupt state governments.

A Government Takeover Preview: Sen. Ben Nelson (D-NE) has already announced he will vote against the reconciliation bill because of the government takeover of the student loan industry that Democrats tacked onto the health care bill in order to help pay for the new entitlement. The student loan debacle is unfortunately just a preview of the direction the left wants to see health care go. The government first justified subsidizing student loans in the Clinton administration by saying it would make college more affordable. The opposite happened. College costs have only skyrocketed, just like health care costs will only sky rocket under this bill. So now this reconciliation bill is completely nationalizing the student loan industry. Unless the direction of health care policy changes, our health care sector will not be far behind.

Quick Hits:


Don't like to lose your liberties, Don't like taxation: Tough

IBD: 20 Ways ObamaCare Will Take Away Our Freedoms

The sections described below are taken from HR 3590 as agreed to by the Senate and from the reconciliation bill as displayed by the Rules Committee.

1. You are young and don't want health insurance? You are starting up a small business and need to minimize expenses, and one way to do that is to forego health insurance? Tough. You have to pay $750 annually for the "privilege." (Section 1501)

2. You are young and healthy and want to pay for insurance that reflects that status? Tough. You'll have to pay for premiums that cover not only you, but also the guy who smokes three packs a day, drink a gallon of whiskey and eats chicken fat off the floor. That's because insurance companies will no longer be able to underwrite on the basis of a person's health status. (Section 2701).

3. You would like to pay less in premiums by buying insurance with lifetime or annual limits on coverage? Tough. Health insurers will no longer be able to offer such policies, even if that is what customers prefer. (Section 2711).

4. Think you'd like a policy that is cheaper because it doesn't cover preventive care or requires cost-sharing for such care? Tough. Health insurers will no longer be able to offer policies that do not cover preventive services or offer them with cost-sharing, even if that's what the customer wants. (Section 2712).

5. You are an employer and you would like to offer coverage that doesn't allow your employees' slacker children to stay on the policy until age 26? Tough. (Section 2714).

6. You must buy a policy that covers ambulatory patient services, emergency services, hospitalization, maternity and newborn care, mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services; chronic disease management; and pediatric services, including oral and vision care.

You're a single guy without children? Tough, your policy must cover pediatric services. You're a woman who can't have children? Tough, your policy must cover maternity services. You're a teetotaler? Tough, your policy must cover substance abuse treatment. (Add your own violation of personal freedom here.) (Section 1302).

7. Do you want a plan with lots of cost-sharing and low premiums? Well, the best you can do is a "Bronze plan," which has benefits that provide benefits that are actuarially equivalent to 60% of the full actuarial value of the benefits provided under the plan. Anything lower than that, tough. (Section 1302 (d) (1) (A))

8. You are an employer in the small-group insurance market and you'd like to offer policies with deductibles higher than $2,000 for individuals and $4,000 for families? Tough. (Section 1302 (c) (2) (A).

9. If you are a large employer (defined as at least 50 employees) and you do not want to provide health insurance to your employee, then you will pay a $750 fine per employee (It could be $2,000 to $3,000 under the reconciliation changes). Think you know how to better spend that money? Tough. (Section 1513).

10. You are an employer who offers health flexible spending arrangements and your employees want to deduct more than $2,500 from their salaries for it? Sorry, can't do that. (Section 9005 (i)).

11. If you are a physician and you don't want the government looking over your shoulder? Tough. The Secretary of Health and Human Services is authorized to use your claims data to issue you reports that measure the resources you use, provide information on the quality of care you provide, and compare the resources you use to those used by other physicians. Of course, this will all be just for informational purposes. It's not like the government will ever use it to intervene in your practice and patients' care. Of course not. (Section 3003 (i))

12. If you are a physician and you want to own your own hospital, you must be an owner and have a "Medicare provider agreement" by Feb. 1, 2010. (Dec. 31, 2010 in the reconciliation changes.) If you didn't have those by then, you are out of luck. (Section 6001 (i) (1) (A))

13. If you are a physician owner and you want to expand your hospital? Well, you can't (Section 6001 (i) (1) (B). Unless, it is located in a county where, over the last five years, population growth has been 150% of what it has been in the state (Section 6601 (i) (3) ( E)). And then you cannot increase your capacity by more than 200% (Section 6001 (i) (3) (C)).

14. You are a health insurer and you want to raise premiums to meet costs? Well, if that increase is deemed "unreasonable" by the Secretary of Health and Human Services it will be subject to review and can be denied. (Section 1003)

15. The government will extract a fee of $2.3 billion annually from the pharmaceutical industry. If you are a pharmaceutical company what you will pay depends on the ratio of the number of brand-name drugs you sell to the total number of brand-name drugs sold in the U.S. So, if you sell 10% of the brand-name drugs in the U.S., what you pay will be 10% multiplied by $2.3 billion, or $230,000,000. (Under reconciliation, it starts at $2.55 billion, jumps to $3 billion in 2012, then to $3.5 billion in 2017 and $4.2 billion in 2018, before settling at $2.8 billion in 2019 (Section 1404)). Think you, as a pharmaceutical executive, know how to better use that money, say for research and development? Tough. (Section 9008 (b)).

16. The government will extract a fee of $2 billion annually from medical device makers. If you are a medical device maker what you will pay depends on your share of medical device sales in the U.S. So, if you sell 10% of the medical devices in the U.S., what you pay will be 10% multiplied by $2 billion, or $200,000,000. Think you, as a medical device maker, know how to better use that money, say for R&D? Tough. (Section 9009 (b)).

The reconciliation package turns that into a 2.9% excise tax for medical device makers. Think you, as a medical device maker, know how to better use that money, say for research and development? Tough. (Section 1405).

17. The government will extract a fee of $6.7 billion annually from insurance companies. If you are an insurer, what you will pay depends on your share of net premiums plus 200% of your administrative costs. So, if your net premiums and administrative costs are equal to 10% of the total, you will pay 10% of $6.7 billion, or $670,000,000. In the reconciliation bill, the fee will start at $8 billion in 2014, $11.3 billion in 2015, $1.9 billion in 2017, and $14.3 billion in 2018 (Section 1406).Think you, as an insurance executive, know how to better spend that money? Tough.(Section 9010 (b) (1) (A and B).)

18. If an insurance company board or its stockholders think the CEO is worth more than $500,000 in deferred compensation? Tough.(Section 9014).

19. You will have to pay an additional 0.5% payroll tax on any dollar you make over $250,000 if you file a joint return and $200,000 if you file an individual return. What? You think you know how to spend the money you earned better than the government? Tough. (Section 9015).

That amount will rise to a 3.8% tax if reconciliation passes. It will also apply to investment income, estates, and trusts. You think you know how to spend the money you earned better than the government? Like you need to ask. (Section 1402).

20. If you go for cosmetic surgery, you will pay an additional 5% tax on the cost of the procedure. Think you know how to spend that money you earned better than the government? Tough. (Section 9017).

Bottom line: Health Bill contains a regressive tax on low to moderate income individuals

The Baucus Individual Health Insurance Mandate: Taxing Low-Incomeand Moderate-Income Workers

Published on September 25, 2009 by Robert A. Book, Ph.D. , Guinevere Nell and Paul Winfree

Abstract: The individual mandate in the Baucus health care plan would impose punitively high, regressive taxes on low-income and moderate-income working families. Its penalties and additional taxes on business would discourage companies from hiring or continuing to employ low-income and moderate-income workers. The plan would substantially raise health insurance premiums. Yet the plan would still leave millions of Americans without access to affordable health insurance. Adding to their misfortune, it would then punish them with a tax penalty precisely because they are uninsured.

A key component of the health care plan released by Senator Max Baucus (D-MT) on September 16 is its individual mandate--a legal requirement that nearly every American obtain health insurance or face substantial tax penalties.

The mandate would be implemented through new requirements for employers, a new system of state-based health insurance exchanges, and the IRS, which will impose tax penalties on the uninsured and share personal financial data with employers and health insurance companies.

While making health coverage available to all Americans is an admirable goal, the structure of this particular mandate severely restricts customer choice and imposes a punitive and regressive financial burden on those with the least ability to pay. In effect, the Baucus plan would tell the working poor: "If you have been choosing between food and health insurance, you no longer have that choice. You must buy the health insurance, and we will decide what kind of health insurance you will buy and how much you will pay for it."

The Individual Mandate and the Tax Penalty

Under the plan,almost everyone who is not covered by a government health program would be required to purchase health insurance starting in 2013. The documents that Senator Baucus has released do not specify the coverage requirements except in the vaguest terms, so accurately estimating the premium cost is not yet possible. Pending amendments suggest that no coverage requirements will be specified in final legislative language and the details will be left to the discretion of appointed officials after the bill is passed.

However, it is clear that almost everyone will be required to obtain coverage, and most will be required to pay for it. The mandate will apply to all adults on behalf of themselves and their dependents under age 18. The mandate will apply to 18-year-olds, even if they are still in high school and unable to secure a full-time job without dropping out. The plan would make exceptions for religious objectors, for undocumented aliens, and possibly in some "hardship" cases if approved by the Secretary of Health and Human Services. However, everyone else would be required to purchase insurance chosen by their employer or approved by a state government-sponsored "exchange."[1]

Those who do not purchase insurance would face a heavy annual tax penalty. Those with incomes between one and three times the federal poverty level (FPL) would face a penalty of $750 per person up to $1,500 per family. This penalty could apply to individuals with incomes as low as $10,831 per year. The penalty for those with incomes above three times FPL would be $950 per person with a maximum of $3,800 per family.[2]

Implementing the Mandate

Those who do not qualify for government health plans or have access to an employer-sponsored health plan would be required to purchase coverage through a state-sponsored "exchange." (It would be possible to purchase health plans outside the exchanges, but plans would have to meet all requirements of the exchange regardless of how they are purchased.) Employees who are offered only single coverage at work would be required to purchase coverage for their dependents under age 18. Otherwise, they would pay the tax penalty.

People whose employers offer health plans would be required to enroll in their employer's plans, unless they can prove that they are already covered through a government program or a family member's employer-based plan. This would force most employees to choose only plans offered through their workplaces.

The Baucusplan makes an exception for employees whose share of the premium exceeds 13 percent of their family income (not just income from that employer).[3] They would be permitted to opt out of their employer's plan and purchase insurance, perhaps receiving an income-based subsidy if they purchase through the exchange.

Families with incomes below four times the FPL that are ineligible for Medicaid (roughly, those with incomes between $29,330 and $88,200 for a family of four) would be eligible for premium subsidies in the exchange. The subsidy is calculated so that the net cost of a standard plan (details unspecified) with an actuarial value of 70 percent (70 percent of what is unspecified) would range from 3 percent of income at the lower end (1.33 times FPL) to 13 percent of income for those with incomes between three and four times the FPL.[4] These subsidies would not be available to those with access to employer-sponsored insurance, except in the case described above. In companies with more than 50 employees that do not offer employer-sponsored insurance, the average cost of the premium subsidy[5] would be charged back to the employer as a tax--a portion of which would be inevitably passed on the employee in the form of lower wages.

Taxing the Sick

The Baucus proposal includes several provisions that will impose higher taxes on taxpayers who need more health care, regardless of income level. It imposes an "Annual Fee on Manufacturers and Importers of Medical Devices," which amounts to an excise tax on all medical devices priced over $100, including everything from wheelchairs and walkers to pacemakers, hearing aids, and MRI scanners.[6]There is a similar annual fee on health insurance companies, clinical laboratories,[7] and manufacturers and importers of branded drugs. All of these annual fees would be passed on to consumers in the form of higher prices and, in the case of devices and drugs covered by insurance, in the form of higher insurance premiums.

These annual fees (that is, taxes) total over $13 billion and would be allocated according to market share.[8] Yet the true impact would be higher because the taxes paid would be treated as profit for corporate income tax purposes. The results could increase the effective tax to as much as $17.6 billion. This may result in money-losing companies paying tax on "profits" they do not actually have.

Some provisions tax those who need health care, but only if they make enough to pay income taxes. For example, it would reduce the cap on income that can be placed tax-free into a Flexible Spending Account (FSA or "cafeteria plan") from $5,000 to $2,000.[9] In addition, it would raise the threshold for itemized deductions of medical expenses from 7.5 percent of income to 10 percent, further penalizing those with high medical expenses not covered by insurance.

Another provision would increase the threshold for deducting excessive medical expenses for income tax purposes. Currently, medical expenses (other than those paid pre-tax through an employer) that exceed 7.5 percent of adjusted gross income are deductible. The Baucus proposal would raise this threshold to 10 percent. This would raise taxes on more than 6 million households that face high health care costs, about half of which have incomes low enough that they would qualify for the subsidies these taxes are intended to pay for.[10]

The revenue from these taxes is intended partly to offset premium subsidies for households with incomes below four times the FPL, but these taxes would be imposed on Americans who need medical devices or prescription drugs, have high out-of-pocket costs, or pay their own health insurance premiums. In effect, the Baucus proposal would tax the sick to subsidize insurance for the healthy, and many of the taxes would be imposed on the same people "helped" by the subsidies.

Taxing Low-Income Workers

The Baucus proposal imposes a partially hidden, substantial tax burden on those who can least afford to pay. First, workers offered insurance through their employer on a pre-tax basis would be required to purchase it, unless their share of the premium exceeds 13 percent of income.[11] This could impose substantial hardships on low-wage workers in companies with generous (i.e., "expensive") health plans. Because employers are required by law to offer the same health insurance options to all full-time employees, low-income workers in mostly high-paying companies (for example, support staff at a law firm) would be at a substantial disadvantage. They could be required to purchase insurance designed and priced for upper-income people, even if the premium nearly exhausts their paychecks.

For example, someone who earns $15,080 per year before taxes by working 40 hours per week at the minimum wage could be required to pay $1,960 for a generous individual health plan or even more for a family plan. A minimum-wage worker could be required to pay almost 20 percent of his or her income in payroll taxes and mandatory health insurance. This employee would not even have the option of declining the health insurance and paying the $750 penalty, since employees would not be allowed to opt out of their employer plans unless they could prove they had other insurance. In effect, the worker would be forced to buy an expensive health insurance plan instead of other necessities, such as food and rent.

Furthermore, if the value of the employer-offered plan exceeds $8,000 for an individual or $21,000 for a family,[12] the employee would be subject to a 35 percent excise tax on the amount above those limits. This tax rate is much higher than the income tax rates that most families pay on regular income. Figures from the Current Population Survey and the Medicare Expenditure Panel Survey show that more than 570,000 families that pay no income tax or are in the 10 percent income tax bracket would be subject to this punitive 35 percent tax on "excessive" health benefits. More than 7.2 million households--almost 94 percent of those paying the excise tax--would pay higher taxes on their health insurance than on their income.[13] Of course, because purchasing the insurance would become mandatory, those numbers could become even higher if this proposal becomes law. (See Chart 1.) A full-time minimum-wage worker with a generous employer-paid plan could be forced to pay hundreds of dollars in excise tax even if the employer paid the entire health care premium.