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  • Oppressing the Poor with Health Care Reform

    In a recent New York Times column titled, “How an Insurance Mandate Could Leave Many Worse Off,” George Mason University economics professor Tyler Cowen pointed out:

    AMERICANS seem to like the idea of broadening health insurance coverage, but they may not want to be forced to buy it. With health care costs high and rising, such government mandates would make many people worse off.
    The proposals now before Congress would require just about everyone to buy health insurance or to get it through their employers — which would generally result in lower wages. In other words, millions of people would be compelled to spend lots of money on something they previously did not want, at least not at prevailing prices.
    Estimates of this burden vary, but for a family of four it could range up to $14,000 a year over the next decade, according to the Congressional Budget Office. Right now, many Americans take the gamble of going without insurance, just as many of us take our chances with how much we drive or how little we exercise.

    In effect, if these proposals pass, the Democrats would be telling 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.”

    Professor Cowen is right – but that is only the beginning of the burden this legislation would put on the poor. Despite the rhetoric about “spreading the wealth around,” much of the tax burden falls squarely on the poor – as well as on those who employ low-income workers. Naturally, when business have to pay higher taxes for hiring workers from low-income families, many of the workers who need jobs the most will find themselves taxed out of their jobs.

    As if that weren’t bad enough, the Senate Finance Committee’s bill contains several new taxes that narrowly target people who need health care, regardless of income level. There are taxes on medical devices, taxes on high-end health plans, and a cut in the tax deduction for those with high health care expenses.

    Professor Cowen goes on to point out that the subsidies for those with low and moderate incomes act like a very high tax rate:

    A subtler problem is what economists call “implicit marginal tax rates.”
    The fiscal reality is that not all income groups can receive equal subsidies; as a family earns more, its subsidy would probably decrease, eventually falling to zero. But then we are taking money away from the poor as they climb into higher income categories. This is a disincentive to earn more, and the strength of the disincentive increases with our initial generosity. For many people, the health insurance aid would phase out when food stamps, housing vouchers and the earned income tax credit also end and the personal income tax kicks in.
    This structure of incentives would likely discourage many parents from earning a better life for their children. Congress could tweak the subsidies so they don’t phase out so quickly, but then we’re back to very high fiscal costs and subsidies for many families in the higher income classes.

    Indeed, James Capretta of the Ethics and Public Policy Center has run the numbers, and calculated that those earning incomes just over the federal poverty line would face an effective marginal income tax rate of 70 percent! And that’s before including the effects of losing food stamps and housing subsidies.

    Needless to say, this would leave the poor facing a higher marginal tax rate than even the richest Americans. Is this what then-candidate Obama meant when he said, “If you make less than a quarter of a million dollars a year, you will not see a single dime of your taxes go up. If you make $200,000 a year or less, your taxes will go down”?

    Posted in Obamacare [slideshow_deploy]

    7 Responses to Oppressing the Poor with Health Care Reform

    1. Tom Morris 55433 says:

      Want Obama to define "TRANSPARENT"

    2. JohnR, Michigan says:

      Of course this is correct. Only a complete fool could believe that the Middle class and Lower-Middle class won't end up significantly worse off with higher taxes and (once rationing kicks in) lower quality and quantity of health care. The trade-off will be universal coverage and protection against catastrophically expensive costs. So…as usual under the Dems…the bottom 20% will be slightly better off and the top 80% will foot the bill.

    3. Vinny L says:

      Here's why you and the GOP are afraid of the new Harry bill…

      1. You can't call it commie, because your confederate red state can opt out of the public option if they want!

      2. You're afraid that if you opt out of the public option your red confederate state constituancy (poor teabagger sheep) will begin to watch their fellow Americans in the blue Union states healthcare cost go down. Then they will turn their angry eyes on to you…

      For your viewing pleasure:

      Ronald Reagan in an ad opposing Medicare lol…

      http://www.youtube.com/watch?v=6FzNTB1qtFA

    4. Steve Hansmann/East says:

      What a load of horse-apples; another truck-load of intellectual compost by someone who doesn't even know a middle or lower working class person. I know LOTS of families paying over fourteen thousand dollars a year now, for crappy health insurance, (high deductibles, co-pays, caps etc.), and there's no end in sight to this. Please, just what exactly is the republican plan for health care reform? Despite dedicated efforts on my part, I find nothing except the vicious illusion of HSA's, which only work for people financially secure enough not to need them, or nothing, let the market work, and the fact that it hasn't should give one pause. By the way, I'm a 56 year-old RN and know whatof I speak.

    5. Bobbie Jay says:

      Hey, Vinny, Steve, you're ignorant and I'm not republican. It's the government's duty to oversee discrepancies, in regard to your comment, Steve. Seems government neglected that duty amongst many others, long enough, so you would be easily convinced and build resentment, towards the market and government's set-up that it doesn't work. It does, Steve and Vinny.

      If government did THEIR JOB OF OVERSIGHT, in the first place, none of this would be at issue. This scam only builds MORE CORRUPTION OF COSTS AND COMPROMISES PEOPLES PERSONAL HEALTH.

      It's not the duty of the government to interfere or compete in the private market. (THEIR TAX PAID DUTY WAS TO OVERSEE, AND THEY FAILED…Steve) It's not the government's right to eliminate or PUNISH freedom of choice! What they should be doing is enabling people to pay the expenses of their OWN PERSONAL HEALTH WITHIN THEIR OWN PERSONAL BUDGETS.

      In my opinion, there are only TWO CLASSES of entitlements, that being seniors and the military (vets also.) Government puts anyone they want with bias and discrimination not ones that truly deserve and earned.

      FYI: I am not a senior, nor a member of the military, nor a vet and I do not work for any insurance industry.

    6. Pingback: The Left’s Health Care Crony Capitalism | Fix Health Care Policy

    7. Pingback: News to Use « Hugoville

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