House Health Care Bill Taxes Millionaires

5150235House Speaker Nancy Pelosi and other leaders from the House of Representatives on Tuesday unveiled the House version of health care reform legislation.

The measure, among other things, would impose a new income tax on the wealthiest Americans and mandate all Americans get health insurance. Pelosi and Rep. Henry Waxman (D-Calif.), who is responsible for health care reform in the House Energy and Commerce Committee, stood under a banner today that read "Quality affordable health care for the middle class," while promising the bill would pass before Congress breaks for its August recess, the Associated Press reported.

The House Ways and Means Committee, one of three committees that will review the bill, is expected to vote on it as early as this week. The swift movement on the legislation, however, does not mean the debate over reform is over. The House bill embraces some of the most controversial reform proposals on the table.

The legislation comes at a price of $1 trillion over 10 years, the New York Times reported, which legislators aim to pay for in part by raising taxes by 5.4 percent on taxpayers making more than $1 million a year. The plan would also seek out revenues from anticipated cuts in Medicare and Medicaid spending.

The bill would create a government-run health insurance option, or "public plan," a key part of reform for most liberals. It would also prohibit insurers from raising rates or denying coverage to people because of pre-existing conditions.

It also includes a mandate for both individuals and businesses. If individuals do not acquire health insurance, they would face a penalty of 2.5 percent of their income, the AP reported, though the penalty would not exceed the average cost of health insurance. Meanwhile, employers would have to offer workers insurance or pay a fee of 8 percent of a worker's wages. Small businesses would be exempt.

The bill comes one day after President Obama met with Democratic leaders in charge of the reform efforts to urge them to pass legislation in both the House and the Senate before the August recess. Leaders at the meeting discussed the House income tax proposal -- which the Senate is unlikely to consider, Sen. Max Baucus (D-Mont.) said, according to the New York Times.

Mr. Obama in a statement today praised the House for its "unprecedented cooperation to produce a health care reform proposal that will lower costs, provide better care for patients and ensure fair treatment of consumers by the insurance industry."

"I look forward to continuing to work with all House members in ensuring this legislation helps all Americans and plays an essential role in reducing deficits and bringing fiscal sustainability to our nation," Mr. Obama said.

[mikeoliphant]

The House Health Care Bill, 1,018-page document, released this week (July 14th, 2009) reveals some concerns as noted by http://www.benefitsmanager.net and http://www.dentalinsuranceutah.net. Mike Oliphant serves as health care consultant with these two popular websites in Utah. He also is a serving board member with Utah Association of Health Underwriters. A provision within this bill would indeed outlaw individual private coverage. Under the Orwellian header of "Protecting The Choice To Keep Current Coverage," the "Limitation On New Enrollment" section of the bill clearly states:

"Except as provided in this paragraph, the individual health insurance issuer offering such coverage does not enroll any individual in such coverage if the first effective date of coverage is on or after the first day" of the year the legislation becomes law.
This translates into those who currently have private individual coverage won't be able to change it. It is likely that those same people will suffer abnormally high rate increases over time which would force them out of coverage. Nor will those who leave a company to work for themselves be free to buy individual plans from private carriers.
From the beginning, www.benefitsmanager.net and www.dentalinsuranceutah.net warned that if the government gets into the business of offering subsidized health insurance coverage, the private insurance market will wither. Drawn by a public option that will be 30% to 40% cheaper than their current premiums because taxpayers will be funding it, employers will gladly scrap their private plans and go with Washington's coverage. The nonpartisan Lewin Group estimated in April that 120 million or more Americans could lose their group coverage at work and end up in such a program. That would leave private carriers with 50 million or fewer customers. This could cause the market to, as Lewin Vice President John Sheils put it, "fizzle out altogether."
What wasn't known until now is that the bill itself will kill the market for private individual coverage by not letting any new policies be written after the public option becomes law. The legislation is also likely to finish off health savings accounts, a goal that Democrats have had for years. They want to crush that alternative because nothing gives individuals more control over their medical care, and the government less, than HSAs. With HSAs out of the way, a key obstacle to the left's expansion of the welfare state will be removed.
http://www.SelectHealth.biz states that the public option won't be an option for many, but rather a mandate for buying government care. A free people should be outraged at this advance of soft tyranny. Washington does not have the constitutional or moral authority to outlaw private markets in which parties voluntarily participate. It shouldn't be killing business opportunities, or limiting choices, or legislating major changes in Americans' lives.

[marcat82073]

Joe,

It does say small businesses are exemt from the 8% penalty/requirement to offer health insurance. I believe that businesses that employ a certain number of people are required under federal law to offer health insurance benefits. So the employer can ony drop the plan if they have less than the required amount of employees. In theory the more people under a plan the cheaper the premiums are, so those employed by a small business may be able to obtain cheaper insurance under the "public plan" than what they were paying before if the business owner decides the 8% penalty would save the company money.

I beleive the "public plan" would have to be alot cheaper than what is being offered by most employers. If the penalty for not obtaining insurace is only 2.8% of a person's income. One would hope so anyway.

I am for it, if it will save me money in the long run let it happen.

A little off the subject, I work with a married woman with 2 kids a husband and they own a house they can not afford and they get state insurance for thier little rug rats, oh yeah they make more money combined than we do and for some reason we do not qualify. We get in heated arguments all the time, she say they just can't afford the health insurance here at work, I can't either but I need it. She grew up in "system" and knows how to work it I guess.I even think she gets food stamps. With the money they are not spending on health insurance they are buying brand new cars, taking tripsetc. She even gets her doctor to write a prescription for children's vitamins she she doesn't have to pay for them at the store.

[JoeD912]

Can someone explain how the 8% employer penalty works? If the employer opts to pay the 8% and drop coverage, then the employees will no longer "have a choice to stay with your current plan" as the President says.

If the 8% of wages is less than the employer currently pays, then this probably will be a common decision. Since no money is added to the employee's paycheck, the employee is now responsible for purchasing health care with just their prior contribution (usually 30% to 40% of the cost today) and they are then apparently responsible for the full cost of the purchase.

That doesn't seem to make a lot of sense, so I'm wondering if I've got it wrong. Does anyone know how this provision is supposed to work? It seems understanding it is crucial to forming an opinion about how this impacts the employee with coverage today.

Joe

[endurorob]

This bill is a thousand pages long andd the house ways and means comittee is going to vote on it this week. How can any of these people read and understand what is in it in that amount of time? They can't. Comrad pelosi tells them to vote yes and that is what they do. Just like the spending bill. All these people vote yes on it and then are shocked at some of the items in it.

[endurorob]

lmartink July 14, 2009 6:38 PM EDT
Good. They should begin paying their fair share. They have ridden on the backs of the GOP gravy train for long enough.

8 years of Reagan. 12 years of Bushes. Enough is enough.


Guess what, they have been paying their fare share of 40% or more of their income. The ones who don't pay their fare share are the who don't pay taxes and will benefit most from the "public option" which will be paid for those who pay taxes.

[mikeoliphant]

I am a health insurance agent in Texas. None of my employers can accept another added tax. They report back to http://www.healthinsurancetexas.biz that they will lay off people or hire only 1099 employees.
Insurance reform + medical provider reform = health care reform, right? Utah health insurance reform has been center focus for the state, UAHU and private insurance carriers over the past 24 months. Mike Oliphant (UAHU board webmaster) runs a small Utah based health insurance website http://www.healthinsurancetexas.biz as well as http://www.DentalInsuranceUtah.net . Mike?s viewpoint provides a unique analysis which comes from being a ?fly on the wall? observer in countless state session and insurance meetings. ?Utah has been thrust into a state insurance reform pressure cooker which isn?t necessarily negative where I am an insurer, insured and patient?. Several interesting changes took place with H.B. 188 passage earlier this year which seems all too familiar to the ongoing federal health care reform attempt under Obama?s administration. The spirit of the bill allows private Utah market place remedies. It essentially guarantees a Utah health insurance carrier a "no loss" or "no gain" premise over competing carriers that operate within the ?Utah Insurance Exchange portal?. On the surface it would seem unattractive to a carrier?s consideration (voluntary at this point). But you have to understand the carriers? goal is to cover their administration fees and maintain a 3% profit. The Utah health insurance reform model claims this can be accomplished now by legislation and the watchful eye of the state?s risk adjuster board. The medical claim risks are essentially shared equally among the participating carriers. Therefore, the carriers can focus on administration efficiencies more so than competition over a fluctuating market share. Insurance carriers such as SelectHealth have efficiencies and risk management experience polished by long tested actuarial tables with health statistics and claim trends. Is it a bad idea to share that experience with a national carrier such as Humana? Would it surprise anyone to know that maternity NICU and anti-depressants represent the highest utilization in health insurance costs for medical and pharmacy in Utah? Compare this to Texas which suffers from abnormally high levels of diabetes and liver disease per capita.
The other half of the ?health care reform equation? is medical provider and billing practices. The state claims this is on the agenda. It is popular belief among Utah legislators that reform stops with the insurance carrier. However, how can the insurance carrier continue to bear the risk and re-distribution of health insurance premiums back out the door in claims without provider billing reform? Add to this obstacle a continuing shrinkage of the insured populace. Obama?s administration proposes mandatory participation in a health insurance policy by employers of all sizes, self employed and unemployed populace. The logic being to shore up the unhealthy with healthy premium. When analyzing the Massachusetts?s system, you actually pay a penalty if you have no proof of coverage. The benefit level and health insurance price is nowhere close when you compare Utah health insurance quotes through HealthInsuranceSource.net or dental insurance quotes at DentalInsuranceUtah.net. Utah premium is easily half. This insight comes from a Utah health insurance agent whom often interacts with employers and residents looking for affordable coverage, making sure claims are paid correctly, implementation and explanation of the many policy procedures and putting a complex SelectHealth insurance language in understandable terms. Yet legislators claim agents to be of no value all in the name to save 3-4 off of Utah health%
With the latest announcement of hospitals agreeing to contribute $155 billion, where are the costs going to be shifted for this donation? In Utah, studies conducted by BenefitsManager.net revealed that cost shifting already exists in the ER. There is apparent lack of legislators in Utah and on the federal level proposing TORT REFORM. It is factual that a majority of US senators and representatives are lawyers. To push liability insurance premiums down that absorb as much as 15% in expenses with most medical providers is significant. Take 15% off total medical expenditures in US and you will see savings in the trillions.
If we go down the path of nationalized health care reforms, will we at some point be forced to address usage and ration? Will we have to define when to refuse further care for patients receiving critical illness treatments, intensive care unit, disease management, neonatal intensive-care unit for? SelectHealth documents that the single most expensive bills are NICU for newborns and seniors in acute / intensive care / pre-hospice.

[mld678]

We need a tax code that rewards achievement and encourages investment for a successful economy. The Obama administration needs to enact policies that bring tax rates in line with our global competitors, but need some encouragement! The Friends of the U.S. Chamber supports these efforts. Sign the Tax Policy or Energy & Environment petition at http://www.friendsoftheuschamber.com/takeaction/index.cfm?ID=85

[GiveMeFreedom]

Agreed. But you and I live on the wrong planet right now. Currently every loser in the world thinks they own the higher income earners. Time will fix it once the movers and shakers decide to stop moving and shaking and all of the jobs are gone.

Funny, I saw lots of jobs created by the people complaining about people making over $250,000 this year. /sarc/

[Diogenes1546]

This is hardly just a tax on millionaires. The tax starts at incomes of only $175,000. Politicians always lie, but one would expect more accuracy from a news organization.

[GiveMeFreedom]

So effective 1/1/2011, the top tax rate if you are lucky enough to make over the threshold will be:

35% current rate
4.6% (millionaire tax surcharge reinstated from Clinton tax act in 1993)
5.4% (new millionaire tax surcharge for health care)
6.2% social security tax
1.45% medicare tax

Now add this to your NYS and NYC combined tax rate of around 15% and someone making great money in NYC will have a top tax rate approaching 60%.

Some of you may think this is great. Let me ask you, if your joint income were $100,000, would you be happy to net $40,000 after taxes?

[GiveMeFreedom]

iam4 - if you make $1 million you will net around $400,000 not $700,000. Where do you get your numbers?

And why should social security not be capped. By the time I retire in 20 years, I will have paid the max for most of my adult life and they will be means testing it, so I will never see a dollar of it back. Great program. What a effing joke.

I am smart enough not to live in NYC so the tax rates there or in CA will not affect me. My state is a 5% state. Not too bad.

As to my example, do the math yourself. 35% + 5.4% + 4.6% + 1.45% + .65% = 62.1%

The .65% is the approximate social security tax divided by $1 million in earnings.

This is repulsive that government needs and takes around 50-60% depending on your state. This excludes state sales tax, real estate taxes, etc.

Sorry if you think this is OK. It is ridiculous.

[GiveMeFreedom]

CORRECTION:

35% + 5.4% + 4.6% + 1.45% + .65% + 15% = 62.10%.

I guess you liberals will not be happy until it is 70-90% huh?