Tag Archives: Health care

“Medicare For All” is more appealing when you hide the enormous tax increase

According to the Washington Post, the “dam is breaking on Democrats’ embrace of single-payer” for healthcare as a fourth member of Congress co-sponsored Bernie Sanders’s “Medicare for all” bill. But the Post makes no mention of the cost for this bill.

Why, you ask, would they only discuss the benefits to be received without mentioning the cost? Hmm…

Heading over to Bernie Sanders’s Medicare for All website, one finds that the cost is estimated to be $1,380,000,000,000. That’s $1.38 trillion.

Bernie Sanders then lists seven ways to raise the required revenue–new taxes, tax increases, and closing loopholes. The largest source of revenue would be a “6.2 percent income-based health care premium paid by employers,” in other words a 6.2% tax on income to be paid by employers, as if employers will just eat the tax increase without passing it on to employees or customers. On top of this is a “2.2 percent income-based premium paid by households,” i.e., a 2.2% tax increase.

Given that all but one of these additional sources of revenue involves directly or indirectly a tax on income, lets just look at the tax increase in aggregate. This year, the federal government is expected to generate revenue of $3.46 trillion. A $1.38 trillion tax increase is the equivalent of all tax rates rising by 40% (40 percent, not 40 percentage points). In other words, social security taxes would have to rise from 6.2% to 8.7%. The lowest tax bracket would have to jump from 10% to 14%. The 25% tax bracket, in which most American probably reside, would need to leap to 35%. And the top tax bracket would have to go from 39.6% to 55.4%.

Bernie Sanders wants to pay for his Medicare For All by taxing the rich. He raises the top tax bracket from 39.6% to 52%, but only on those earning over $10 million. Other high-income people see smaller increases in their income taxes.

How do lower-income earners fare in his proposal? Probably even worse than their high-income counterparts. Although Bernie Sanders tries to hide it by calling one new tax a “6.2 percent income-based health care premium paid by employers” and another a “2.2 percent income-based premium paid by households,” these are, in effect, tax increases of 6.2% and 2.2%, the first to be paid by the employer, who will surely pass all or most of the cost along, and the second to be paid by the earner. If one looks at one’s income tax rate as the total of his income taxes plus social security taxes plus medicare taxes, the lowest tax bracket will go from a current 25.3% to 33.7%, a 33% increase. That may not be the portion paid by the individual, but it’s the amount the government takes and it is the amount paid by earner either directly through his taxes or indirectly through lower wages or highest consumer prices.

The Medicare For All website also claims that a typical family earning $50,000 would save $5,800 in healthcare spending. He does not mention that the new taxes of 2.2% and 6.2% total $4,200. So the saving as much smaller. But the website also points out people currently receive “tax breaks that subsidize health care” to the tune of $310 billion. These would be eliminated under the plan. The website does not say much does a typical family earning $50,000 receive in these “tax breaks.” I wonder why. Needless to say, that $5,800 in savings all but disappears when one accounts for the tax increases and the removal of tax breaks.

Now it’s clear why the Washington Post does not mention the cost of this “Medicare For All” bill. It’s also clear why the Medicare For All website gives a clear picture of how much a typical family saves but not how much it will cost them.

It’s much easier to give away goodies when people think they are free or someone else is paying for them rather than tell them how much it will cost them. If politicians were required to disclose the costs in addition to the benefits (much like a drug advertisement is required to reveal the side-effects), socialist proposals like Medicare For All would surely gather less support than when everything appears to be free.

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President Obama: The Health Care Tyrant

The incoming governor of South Carolina challenged President Obama to repeal the health care bill. TheSunNews.com reports:

Obama rejected Haley’s request to repeal the health care bill – but said he’d consider letting states opt out of its mandates if they ran exchange programs, banned insurance firms from denying coverage of pre-existing conditions and enabled people to pool together for better rates.

Now, I must admit that I did not read the 2,600 page health care bill, so I don’t know if there is a provision that allows the President to issue such exemptions under those terms. Either way, this is very disturbing.

According to this story which is based on Nikki Haley’s comments afterward (there is no way to know what exactly the President said), President Obama “said he’d consider letting states opt out of its mandates…” He apparently is under no obligation to do so even if a state complies with his demands.

According to Obamacare or the government interpretation and enforcement of it, the President has dictatorial powers. The President can grant exemptions to whomever he pleases and deny exemptions to others who comply with the very same provisions.

We have already seen the government issue exemptions for individual corporations, but I was under the impression that there were strict rules to follow and those who follow those rules and apply for an exemption would get one. But now, at least with the states and maybe on the corporate side as well, the exemptions require Presidential approval and the President can make up his own rules.

Hail to the Health Care Tyrant!

Big Republican win expected. What now?

I fully expect the Republicans to take over the House on Tuesday and possibly the Senate. But what will they do once in power. Here’s my initial suggestion:

The first thing the Republican House should do is repeal 2.3% tax on medical equipment. The whole health-care bill was supposed to make health care more available and more affordable. This tax does the exact opposite.

The second thing Republicans should do is pass a bill permanently extending the Bush tax cuts. All of them! Including the tax cuts on high income taxpayers. They should also eliminate estate taxes. As explained in my previous post, estate taxes hurt Main Street. Additionally, it encourages tax avoidance and evasion while raising very little money for the government, about 0.8% of the federal government’s revenue.

Passing these bills will be both good policy and good politics. Maybe, hopefully, a Democratic Senate (if they hold on) will pass the House’s bills and President Obama will sign them, but I doubt it. But that makes these bills good politics as well. Republicans can claim they worked to make health care more affordable and help the American people. But the Democrats were more interested in government control and not helping the people make ends meet and health care more affordable.

These two bills would not only be a test of the Democrats’ resolve, but also of the Republicans’. I want to see these bills passed by the House without any of the crazy amendments or earmarks that too often get attached to bills. Let’s see if these Republicans really do believe in the Constitution and good governance.

These bills are not the end-all-be-all, but they will be a good start.

Record number in government anti-poverty programs. Fewer people to support them.

In The Path to Tyranny, I wrote:

Why work if the government will provide free food, subsidized housing, free health care, and a welfare check?

It turns out that fewer people are working and more are relying on government assistance. The USA Today reports Record number in government anti-poverty programs. Here are some of the numbers:

  • “More than 50 million Americans are on Medicaid.”
  • “The new health care law adds about 16 million people, beginning in 2014.”
  • “More than 40 million people get food stamps.”
  • “Close to 10 million receive unemployment insurance.”
  • “More than 4.4 million people are on welfare.”
  • “The federal price tag for Medicaid has jumped 36% in two years, to $273 billion. Jobless benefits have soared from $43 billion to $160 billion. The food stamps program has risen 80%, to $70 billion. Welfare is up 24%, to $22 billion. Taken together, they cost more than Medicare.”

All told, these government welfare programs cost $525 billion. Currently, there are 139 million employed people in the United States. Thus, each worker is taxed about $3,800 to support the unemployed. The average employee earns about $40,000 per year. So he gives up 9.5% of his wages to be received by the employed. The unemployment rate is 9.5%, an exact match for this income redistribution scheme.

Of course, the average employed person lives much better than the average unemployed person. But this is not always true at the margin. A  below average wage earner may find he or she is better off not working and choose to receive government welfare instead. This is especially true if he or she has children and would have to pay for childcare while working. The added childcare expense along with taxes and transportation expense may make it financial wiser to stay unemployed and receive government assistance.

Not only are these programs costing hard-working Americans a large portion of their earnings, it is encouraging many to stay at home when they could work and would like to work.