Tag Archives: Health care reform

“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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If Obamacare is so great, why all the exemptions?

According to the latest report:

HHS posted 126 new waivers on Friday, bringing the total to 1,040 organizations that have been granted a one-year exemption from a new coverage requirement included in the healthcare reform law enacted almost a year ago.

About 2.6 million people are covered by the waivers, representing less than 2 percent of privately insured individuals, according to HHS.

With 2.6 million people now exempt from Obamacare, we are are getting close to my goal of 300 million exemptions.

How to repeal Obamacare without repealing it!

So far, more than 700 organizations have received waivers on Obamacare.

Assuming a new President is elected in 2012, this President can simply hand out 300,000,000 waivers. Problem solved!

McConnell talks about the path to tyranny

One of today’s top headlines:

McConnell: Health Care Reform Leads America On A Path To Tyranny

McConnell’s actual statement:

“By preventing the accumulation of excessive power, the Constitution is designed to reduce the risk of tyranny or abuse at either the Federal or state levels,” McConnell told the audience of conservative legal scholars. “The health care bill would remove an important bulwark of this protection.”

Wouldn’t it be great if somebody wrote a book about this? Maybe he could call this book The Path to Tyranny.

Baseball analogy for tea party “victory”

To follow up on my post Has the Tea Party accomplished anything yet?

Over the last two years, the Democrats have scored a lot of runs. They hit a grand slam with health care reform. Another home run with stimulus spending. Another with financial reform. They racked up one run after another.

Finally, the tea party movement struck out the Democrats in spectacular fashion (the biggest electoral turnaround in 62 years) and the top half of the inning is over. Now, it is the tea party’s turn to try and score some runs. But the limited government side is trailing 37 to zero (government spending excluding defense is 37 percent of GDP).

The GOP now controls the House of Representative, but it does not yet have Senate or Presidency. So the tea party movement has a man on first base. But it’s in a deep hole, down by 37 runs, and has to start scoring runs in abundance.

I’m sure you can see why I am not too excited by the tea party “victory” of November 2. Yes, the tea party movement, which didn’t even exist two years ago, stopped the Democrats from scoring more runs, but to win you must score runs of your own. In this respect, the tea party has not accomplished anything.

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.