Thursday, December 24, 2009

Not only have we lost jobs, we have lost the Freedom of choice

As many as 24 million people would still remain uninsured in 2019; many of them otherwise eligible Americans who still can't afford the premiums. Over 60% of the American public was opposed to the new health plan, but it the Democrats had to push it through because it was all about change. The only change I see is in voting every one of them out. This plan will cost more and not save you a penny.

The new plan will phase in little by little, over the next three to four years. Ultimately all Americans will be mandated to carry coverage or face a tax penalty, except in cases of financial hardship. Insurers won't be able to deny coverage to people with health problems, or charge them more or cut them off. A family of four with annual income between $22,000 and $66,000 would face a fine ranging from $750 to $1,500 a year if they failed to buy health insurance. For families earning more than $66,000, the fine could be as steep as $3,800. Provisions of the bill cause the government to take two-thirds of any additional income of a family with a modest income of $54,000.

As a poor family earns more income, their subsidy is reduced, and the cut in the subsidy falls faster than the rise in the family’s income until the family’s income has risen to the point where it no longer qualifies for a subsidy.

A higher pay check means higher Federal income taxes. A family earning $54,000 a year is in a 25 per cent marginal tax bracket. 25 per cent of the addition $12,000 means $3,000 in extra Federal income tax.

Now, over time this family has increased earnings of $12,000, means higher Social Security and Medicare contributions of 7.65 per cent (actually, double this figure, since the employee pays the employers share in the form of lower wages, not considered here). This amounts to a deduction of another $918 from the $12,000 pay raise. So far, the government has taxed $6,718 out of the $12,000 raise.

Given all these deductions for taxes and fees, the actual amount of additional purchasing power to the example family from a $12,000 raise in pay is only about $4,000, or one-third of the supposed increase their increase in income.

Under the legislation those who now will have the most trouble finding and keeping coverage: people who buy their own insurance or work for small businesses.

Some people's taxes would go up.

Buying into Medicare won't be cheap, about $7,600 a year not counting out-of-pocket costs for deductibles and copayments.

A new report from government economic analysts at the Health and Human Services Department found that the nation’s $2.5 trillion annual health care tab won’t shrink under the Democratic proposal that senators just passed. Instead, it would grow somewhat more rapidly than if Congress did nothing. Something the Democrats just happened to leave out while the snake oil was being pushed to the public.

Also troubling was the report’s assessment that the Democrats’ plan to squeeze Medicare for $493 billion over 10 years in savings relies on specific policy changes that “may be unrealistic” and could lead to cuts in services.

The report somberly warned that a new long-term care insurance plan included in the legislation could “face a significant risk of failure” because it would attract people in poor health, leading to higher and higher premiums, and eventually triggering an “insurance death spiral.”

"Health-care reform cannot be considered successful if it makes coverage more expensive," said Scott P. Serota, Blue Cross and Blue Shield Association president and CEO.

The “individual responsibility” provision in Section 1501 (pages 320-340) would require anyone who fails to obtain a qualifying health plan – with a benefit package to be defined later by bureaucrats – to pay an annual tax penalty of $750 per adult family member and $375 per child, with a maximum penalty of $2,250 per family. These penalties will be phased in from 2014 to 2016 and then indexed for inflation, which means they are likely to increase nearly every year. These taxes are fixed amounts based on family size, not income.

The rich will not pay more, and the middle class will not pay less (although the poor may qualify for exemptions). This is even worse than the House bill, which imposed a tax equal to 2.5 percent of modified adjusted gross income above the minimum income necessary to file a tax return. A family of at least two adults and two children is actually worse off under the Senate bill if they make less than $99,350 a year and worse off under the House bill if they make more. The only nod to affordability is a “hardship exemption” if the lowest available premium for a bare-bones plan is more than 8 percent of your income. But that saves you money only if your income is less than $28,125 a year.

Companies with more than 50 employees are required to offer qualified health plans, to their full-time employees or pay a tax of $750 per full-time employee. That’s a lot cheaper than providing health insurance, and the $750 is just a tax – it doesn’t count towards the employee’s premium.

However, an employer who does offer qualifying insurance isn’t off the hook. Suppose an employer offers insurance, but has an employee from a low-income family who qualifies for a premium subsidy in the “health insurance exchange” and decides to accept it. In that case, the employer is stuck with a tax penalty of $3,000 for that employee, and every other employee who qualifies and makes that same choice – unless it’s more than a quarter of the employees, in which case the tax is capped at $750 times the total number of full-time employees. (Workers will be permitted to opt out of their employer’s plan only if they qualify for a subsidy, have insurance through another family member, or if the employer covers less than 60 percent of their premium.)

In other words, if a company has a lot of low-income workers, they can save money by dropping their health plan and just paying the $750 per-employee tax. (And they can make as many employees as possible part-time.) However, if they have mostly middle-income workers, they face a heavy penalty — $3,000 – every time they hire a worker from a low-income family. This goes by the employee’s family income, not the income the employee is paid by any particular company. So a company could save $3,000 by hiring, say, someone with a working spouse or a teenager with working parents, rather than a single mother with three children.

Even worse, if at least a quarter of the employees qualify for a premium subsidy based on their income and family size, the company is going to end up paying the same $750 per-employee tax – whether they offer insurance or not! So companies with a lot of low-income employees will essentially be encouraged to drop their health plans entire, dumping the remaining higher-income employees into the federal exchange at their own expense.

Employers will have a strong tax incentive to lay off the workers who need the jobs most – people without other sources of income.

New taxes and fees imposed on businesses will "discourage companies from hiring or continuing to employ low-income and moderate-income workers. Small-business owners who do not generate enough revenue to pay their workers' wages in addition to the new taxes and fees would be forced to lay off their lowest-paid employees to comply with the law. So in essence the next person in line would be the next lowest-paid employee?

Federal Reserve Chairman Ben Bernanke stated, "By holding down the growth of national saving and real capital accumulation, the prospective increase in the budget deficit will place at risk future living standards of our country." And according to the Congressional Budget Office, "Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress income growth in the United States. Over time, the accumulation of debt would seriously harm the economy.”

As prospective cuts to Medicare Advantage are made, writes Michael D. Tanner of Cato, "many insurers are expected to stop participating in the program, while others will probably increase the premiums they charge seniors." The Congressional Budget Office agrees, saying that cuts to Medicare Advantage "could lead many plans to limit the benefits they offer, raise their premiums, or withdraw from the program," devastating seniors' health care options.

A number of proposals will assume steep cuts in Medicare payments to doctors. It would cut payments to doctors by 25 percent in 2011, with even steeper cuts later, the Wall Street Journal says these cuts "will cause many doctors to quit the program."

Medicare patients already have difficulty finding doctors, especially in some markets, would be exacerbated as the number of doctors willing to treat Medicare patients will shrink at the very time the number of Medicare recipients is increasing (due to the retirement of baby boomers, and other factors).

The new Health Plan will erode your privacy by expanding the IRS and mandating that insurers, employers and government agencies share with one another your personal financial information. They will have the authority at some point to invade you savings or checking to determine whether you can afford health care or not.

The National Federation of Independent Business estimates that mandating that employers provide health care will cost an additional 1.6 million jobs by 2013.

Unemployment is at a 25 year high, yet the White House and Congress continue to ignore the ruinous cost health care reform legislation will have on small business.

It is small businesses that drive our economy. This bill will not only kill jobs, it will prevent job growth and expansion.

We can look towards higher insurance premiums, more and higher taxes, fewer jobs, lower wages, a reduced standard of living and an erosion of privacy and individual liberty.

This is a bill about control and nothing else. We are now being mandated by our government to carry healthcare or be penalized if we don’t.

This is a sickening abuse of governmental power and a violation of every American's right to decide what is best for themselves and his or her family.

We as Americans have lost another freedom, the freedom of choice.

How much longer before we lose our right to vote?

~ Joe Sinagra

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