Aug. 10, 2009
What Will Health Care Reform Cost You?
MoneyWatch.com: How the Health Bill Payment Options Could Affect Federal Deficit, And What Comes Out of Taxpayers' Pockets
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Play CBS Video Video Still Debating Health Reform In town hall meetings across the country, the debate over health care reform is loud and nasty, even when audiences and speakers agree. As Kelly Colbiella reports, many are still skeptical.
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Although President Obama and congressional leaders have been adamant that health care reform will be financed through savings on existing programs or new revenue, the Congressional Budget Office estimates that the House proposal would actually increase the deficit by $239 billion over 10 years. (IStockPhoto)
From Our Partner:
Health care reform, if it passes, will cost about $1 trillion over the next 10 years. Negotiators in the Senate and House are now saying they've winnowed the cost down to "only" $900 billion or so. Where will that money come from? Look in the mirror.
Although President Obama and congressional leaders have been adamant that health care reform will be financed through savings on existing programs or new revenue, the Congressional Budget Office estimates that the House proposal would actually increase the deficit by $239 billion over 10 years. While it's too soon to say what the final plan or its financing will look like - several versions of the bill in both the House and the Senate would have to be reconciled before final votes are held - here are the key financing options that are on the table.
Squeeze savings out of Medicare and Medicaid
This proposal would provide about half the money necessary for the health care overhaul, in part by reducing payments to hospitals that treat Medicare patients. Payments to private Medicare Advantage plans would be trimmed by $156 billion over 10 years to bring them in line with payment rates for patients in traditional Medicare. Supporters of a private-market approach to Medicare, who have seen the writing on the wall for some time on this issue, caution that some seniors may suffer if private plans, which may offer enhanced services and better-coordinated care than traditional Medicare, pull back in their markets.
Tax the wealthy
The current House bill would impose an income tax surcharge starting at 1.0 percent on the top 1.2 percent of earners in the country, or individuals with adjusted gross incomes over $280,000 and families that earn more than $350,000 (some legislators are calling for a higher threshold, however). The Joint Committee on Taxation estimates that the surcharge would have no impact on 96 percent of small businesses, but "imposing taxes on anybody in a recession is not going to promote economic growth," says Joseph Antos, a health policy expert at the right-leaning American Enterprise Institute. Negotiators on the Senate Finance Committee reportedly prefer to raise revenues to pay for health reform from within the health care system itself, by taxing the value of health insurance benefits, for example, or penalizing employers who don't offer health insurance.
Tax employee health insurance benefits
A typical health insurance plan for a family costs about $13,000 a year, but you pay no income tax on the contributions that your employer makes toward those benefits. That freebie costs the federal government approximately $245 billion in forgone income tax revenues every year. Economists and health policy experts favor eliminating the tax exclusion, as it's called, on the grounds that it encourages overly generous coverage that, in turn, encourages employees to use more health care than they need. Rather than eliminating the tax break entirely, another option would be to cap it at a certain level - for example, the amount of the standard federal employee's health plan, which is now worth about $13,100. Unions, which often have richer-than-average benefits, are strongly opposed to any tax change. Recently, a third option emerged: Tax the insurers or employers that offer "overly" generous plans. Although more politically palatable, experts warn that those charges would get passed along to consumers, likely in the form of higher premiums.
Limit the itemized deductions of the wealthy
This proposal would require taxpayers in the top 33 percent and 35 percent income tax brackets to deduct certain items, like their contributions to charitable organizations and mortgage interest, at the lower 28 percent rate. President Obama recently spoke in favor of this revenue raiser, but it was loudly booed by nonprofits that depend on charitable contributions, as well as homeowners and real estate professionals who benefit from the mortgage tax break. Like the surcharge on the wealthy, this proposal has also gotten less traction among Senate Finance Committee members, because it isn't directly linked to the health sector.
Impose or raise "sin" taxes
Although not strictly related to health care financing, there's a certain logic to raising money for health reform through taxes on sugary soft drinks and alcohol. On the other hand, sin taxes tend to fall disproportionately on poor people, who have less ability to pay taxes in the first place. Interest in this option got a boost following a recent report that obesity-related costs account for over 9 percent of all annual medical spending, or $147 billion. People changing their habits as a result of new taxes could lower these expenses, but those savings are hard to quantify and may be offset by Social Security and Medicare costs attributed to people living longer, as the CBO has noted.
Penalize employers who don't offer health insurance
Both bills have "pay or play" provisions that penalize employers who don't offer health insurance to their workers. But penalties in the House version are more stringent - up to 8 percent of payroll - compared with the Senate version, which would impose a flat $750 penalty per full-time worker. Some small businesses would be exempt from this provision, including employers with 25 or fewer employees under the Senate bill and employers with annual payrolls of less than either $250,000 or $500,000 under the House bill. (The House committees approved different thresholds and will have to work out the differences.)
Lower the insurance subsidy threshold
Current House and Senate bills allow individuals and families with incomes up to four times the federal poverty level ($43,320 for a single person or $88,200 for a family of four) to qualify for help buying coverage through the national insurance exchange. But as negotiators look for ways to trim health reform's trillion-dollar price tag, the more than $700 billion that's earmarked for subsidies could come under scrutiny. "Reducing the outlay from 400 [percent] to 300 percent of poverty is probably something they'll have to do," says Paul Ginsburg, president of the Center for Studying Health System Change, a nonpartisan research and policy organization. It's a tough call between raising health insurance costs for someone who earns just a bit more than someone else and saving tens or even hundreds of millions of dollars in total program costs. Then again, most of these choices are.
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Add a Comment See all 57 Comments
- Are we are forgetting that the earth can only support so many people. I also predict health care costs will only rise due to inflation or over population. Before long the next big topic will be more about basics food, water and fuel. Only the people will wind up depending even more on big government for social and political hand outs. Driving our country even deeper into debt. I am not a conservative or a big spender just an average working american. I have to ask but is it or is it not illegal to print money i mean think about it. If i was printing fake money would i not go to prison for it. It just seems to me that there are a lot of good people in this world with good ideas and intentions. But when is it time to say no? I support our president and i also understand the republican side. But it seems like every one is focused on right now instead of the future? Its always i want i need or give me this but when it comes down to who's going to be the responsible one and do the right thing who pay's the price the average american citizen. On every level there will always be inequality between rich poor race or religion but what is it going to take to show every one we are creating our own depression.
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- Regardless of what happens with health reform, there are things you can do to help manage the cost of your healthcare. Several sites now offer price search info and advice, including www.healthharbor.com. Take matters into your own hands -- grassroots change is how the most profound shifts occur in our country.
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- The CBO estimates the cost to be $239 billion over 10 years. Count on it being closer to $1 trillion. Remember "cash for clunkers"? How about the $8,000 tax credit for first time home buyers? The government is NEVER correct on its' estimates.
Meanwhile, the UNFUNDED liabilities for medicare, social security and the prescription drug coverage total more than $59 trillion. Let's keep on adding to that number. - Reply to this comment
- I keep hearing derogatory comments about illegal immigrants and people not working hard enough. I see some light on both sides of thinking, but why has NO ONE brought up the huge drug problem that creates many emergency visits and creates cancers and reoccuring problems throughout life.
There is not a way where we can tell a person with diabetes that they can not be treated with the continuous consumption of poor food- eating poor food is legal, yet we CAN take away free health care from people using illegal drugs!
Why is it that nurses can take a positive drug test from a Medicare or Medicaid patient, yet not allowed to report it because of confidentiality- so that means my tax money could possibly be going directly to helping people who aren't trying to help themselves whatsoever and doing it illegally! I'm only 20 and already see people my age abusing the health care system while they're using drugs- how is it not just going to get worse (because most druggies I know are in the lower income bracket)? Why do we have to help heroin users live?? I'd much rather my tax dollars go to the seniors who are going to be missing out on money taken away from them than these useless people who cram needles in their veins... - Reply to this comment
- The great government Boogey Man. You know they said it would be a disaster
if Medicare went into effect, they said the same thing about Medicaid.
Well, nothing's perfect.
You don't want the government running your healthcare. What a hapless cliche. So you are saying you want millionaire insurance executives
running your healthcare? Listen to what you are saying.
You have a chronic health issue. You would like to start your own business, you are talented, you know what you are doing.
But wait. You can't. No one will insure you. You are Mr or Mrs "pre-
condition". Remember? Your child or other loved one is critically ill.
Your insurance only goes "so far". But hey, you are a good freedom
loving American, and you don't mind if you get a hospital bill for
$131 thousand dollars. Right?
Do you see people from Holland, Germany, France, and the rest of Europe
flocking here to get away from "government run" health care?
Keep believing what you need to believe. Ask Shaun, or Glenn, if they
have the same kind of policy as you have. - Reply to this comment
- I am just going to get up and say it, those of us that have premium plans and are content with our outstanding doctors, health care system and R & D wonders in the pharmaceutical groups represent my views. Personally I think Obama, Pelosi and the lemming Democrats are dismissively paying us lip service and will get a public option in no matter what. I began to wonder why the politicians and the media usually refer to Canada and the UK for better or worse in all these spin your wheels in mud conversations. Is anybody aware that there are at least 12 nations that offer universal healthcare? One country worth analyzing which I do not have the background to do is Australia.From what I understood, instead of discouraging citizens from maintaining private insurance Aussies are encouraged to have and
retain private policies and are rewarded for it. No need to learn a new language and you are on the beach Jimmy Buffet life style all day. Australia does not have wars to worry about, sometimes they dispatch a small flank, Cities like Sidney and Melbourne are cosmopolitan and exciting. My mother emigrated from war torn Europe in a big boat to Ellis Island in 1948. I am getting sick and tired of what is happening in America. - Reply to this comment
- That policy that costs your employer $10,000 per year will cost $20,000 per year in 10 years. Fewer employers will be able to provide it for their employees. If you ever wondered where most of your salary increases go, they go to ever increasing premium payments.
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- I recently reread an article concerning health care in the November 2008 Readers Digest. It listed many options to save on the cost of health care, one of which was especially interesting. If implemented it would save an estimated 1.5 trillion dollars over a period of ten years. The option? Offer every American the same policies and choices that congress and all federal employees currently enjoy. Why do I not see this brought up in any of the media let alone in our Congress? If you can please read the article as it is quite good and an eye opener.
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- POTUS qoute : If we do nothing, our health insurance premiums will double over the next 10 years. What do I care, the stimulus will be working so well by then that my pay will have tripled, RIGHT?
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- Even with Cash for Clunkers never forget to negotiate the car price.
Jhenry
Blogger
www.cashforclunkersfacts.info
http://www.cashforclunkersfacts.info - Reply to this comment
- It's going to cost $900 billion not in one year, but in ten. The Iraq War cost $700 billion in 6 years, so health care will cost significantly less than that.
From a born and raised US citizen who lived abroad for a few years in a country with national health care, let me tell you it is amazing! It wasn't free, it was affordable. That's all this is about, affordability. Right now I'm facing a $400 bill for a routine EKG, and that's after insurance. There's no peace of mind when, even though I pay monthly for health insurance, my credit card bill swells every time I get sick. - Reply to this comment
- The Status Quo are selling propaganda and downright lies, across the TV, radio bandwidths. LIES! Lies and more lies about both Health care and illegal immigration. The facts are that President Obama has an objective of introducing a Canadian and European type single payer system. In truth it's like a nationwide--MEDICARE--like all senior citizens receive now. It's only difference their will be--NO CO-PAYS, DEDUCTIONS, NO PREMIUMS AND NO PRE -EXISTING CONDITIONS. The Special interest lobbyists, who work for the wealthy health care industry, are using every means possible to derail any kind of Universal health care. We must remember the British/English, French, German, Danish and other have been well accepted by their population for decades, with no worries about bankruptcy or Debt collectors calling. My health care in England, was first class when I lived in there, without financial worries and no distractions from profiteering insurance companies.
Since the inception of the European common market and the directive of open borders for cheap labor pouring into the industrialized nations, they have been overwhelmed by the impoverished needing health care. Such conditions didn't exist before the 1960's, as the their was no mass immigration and waiting periods. In America today and since the newest waves of legal and illegal immigration, costs to medicate these people have sky rocketed who have never paid one penny into the system. Each previous government never have restricted immigration, but allowed taxpayers to pay for their health care and welfare benefits. Each year approximately 1.5 million new immigrants are granted work visas and many become public charges.
Now Obama is insisting on yet another AMNESTY, which will be even costlier to the American taxpayers, so says the Heritage foundation. American taxpayers should not have to subsidize US businesses, which has been happening for years? A large majority of pariah corporate executives, do not want any restrictions on foreign national workers, that is why they have tried to kill a mandated E-Verify identity data base, to extract all illegal immigrants from the working environment.
That SANCTUARY STATES like California must rescind illegal immigrant refuge policies. That President Obama's health care renewal plan?WILL--attract millions more impoverished people from around the world. That they can join with the 20 plus million already here, to get free medical care under the Democrats law now passing through Congress. - Reply to this comment
- The Status Quo are selling propaganda and downright lies, across the TV, radio bandwidths. LIES! Lies and more lies about both Health care and illegal immigration. The facts are that President Obama has an objective of introducing a Canadian and European type single payer system. In truth it's like a nationwide--MEDICARE--like all senior citizens receive now. It's only difference their will be--NO CO-PAYS, DEDUCTIONS, NO PREMIUMS AND NO PRE -EXISTING CONDITIONS. The Special interest lobbyists, who work for the wealthy health care industry, are using every means possible to derail any kind of Universal health care. We must remember the British/English, French, German, Danish and other have been well accepted by their population for decades, with no worries about bankruptcy or Debt collectors calling. My health care in England, was first class when I lived in there, without financial worries and no distractions from profiteering insurance companies.
Since the inception of the European common market and the directive of open borders for cheap labor pouring into the industrialized nations, they have been overwhelmed by the impoverished needing health care. Such conditions didn't exist before the 1960's, as the their was no mass immigration and waiting periods. In America today and since the newest waves of legal and illegal immigration, costs to medicate these people have sky rocketed who have never paid one penny into the system. Each previous government never have restricted immigration, but allowed taxpayers to pay for their health care and welfare benefits. Each year approximately 1.5 million new immigrants are granted work visas and many become public charges.
Now Obama is insisting on yet another AMNESTY, which will be even costlier to the American taxpayers, so says the Heritage foundation. American taxpayers should not have to subsidize US businesses, which has been happening for years? A large majority of pariah corporate executives, do not want any restrictions on foreign national workers, that is why they have tried to kill a mandated E-Verify identity data base, to extract all illegal immigrants from the working environment.
That SANCTUARY STATES like California must rescind illegal immigrant refuge policies. That President Obama's health care renewal plan?WILL--attract millions more impoverished people from around the world. That they can join with the 20 plus million already here, to get free medical care under the Democrats law now passing through Congress. - Reply to this comment
- So far all the republican have done is say NO, to every Democratic Proposal. As near as I can tell the republican Health Care Reform policy can be summed up simply.
Do nothing. Let the Health Care Industry steal every cent they can get their hands on, just like they let the Bankers steal everything that wasn't nailed down. - Reply to this comment
- ALL THIS FEAR MONGERING IS MAKING ME SICK!!! WE DON'T KNOW HOW MUCH IT WILL COST! Why is it we don't care about the trillions we spend on our military and don't care about the health of our fellow citizens? The world must think we are selfish, greedy and stupid since we have the money to make sure that everyone is healthy, but we don't fight for it. In fact, WE'RE AFRAID. Let's face it. Not everyone can afford good health insurance, let alone insurance.
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- The real answer to what health care costs us really depends on what we compare the costs against.
Today, without it, millions of deprived citizens are unable to treat their disease which escalates and many are unable to work. This existing condition places the cost to the whole population in terms of lost opportunity, which is tangible.
If health care is passed as proposed, much of the population will be healthier, working more productively and erasing the lost opportunity cost mentioned above. The initial years of providing health care will operate in deficit, but improve with time as the population becomes healthier.
It is predicted that about
20% will not see any improvement in their health care, but pay more in the initial years and see their costs decline over time.
40% will see some improvement, but half will pay more and half will pay less in the initial years, and costs will become unchanged over time.
30% will see some decline, but will pay less in the initial years, and possibly see increases over time, because of the type of conditions being treated.
10% will see the biggest improvement and payment will be unchanged from today in the initial years and decrease over time, but this segment of the population will raise the GDP (and taxation revenues) by becoming healthy enough to work or attend school.
The health care costs mean different things to different situations that exist today.
What most of us have to answer is whether meeting the expense will be worth controlling health care costs for 50% of our population and improving the health enough to get 10% more people attending school or working.
It's like the difference between a rain shower and a hail storm. If the temperature is low enough, the hail stones might hurt you. The temperature in every individuals environment is difficult to judge, since we don't really know if change in other unforeseen conditions are coming.
Without doing anything, we will see health care cost double on the average of every six years and outpace the earnings for most workers. - Reply to this comment
- The real answer to what health care costs us really depends on what we compare the costs against.
Today, without it, millions of deprived citizens are unable to treat their disease which escalates and many are unable to work. This existing condition places the cost to the whole population in terms of lost opportunity, which is tangible.
If health care is passed as proposed, much of the population will be healthier, working more productively and erasing the lost opportunity cost mentioned above. The initial years of providing health care will operate in deficit, but improve with time as the population becomes healthier.
It is predicted that about
20% will not see any improvement in their health care, but pay more in the initial years and see their costs decline over time.
40% will see some improvement, but half will pay more and half will pay less in the initial years, and costs will become unchanged over time.
30% will see some decline, but will pay less in the initial years, and possibly see increases over time, because of the type of conditions being treated.
10% will see the biggest improvement and payment will be unchanged from today in the initial years and decrease over time, but this segment of the population will raise the GDP (and taxation revenues) by becoming healthy enough to work or attend school.
The health care costs mean different things to different situations that exist today.
What most of us have to answer is whether meeting the expense will be worth controlling health care costs for 50% of our population and improving the health enough to get 10% more people attending school or working.
It's like the difference between a rain shower and a hail storm. If the temperature is low enough, the hail stones might hurt you. The temperature in every individuals environment is difficult to judge, since we don't really know if change in other unforeseen conditions are coming.
Without doing anything, we will see health care cost double on the average of every six years and outpace the earnings for most workers. - Reply to this comment
- So, Obama is adamant about the cost of Health-care coming from program savings and new revenew.
Medicare: RENAME IT TO KILL OFF SENIORS - Obama wants to cut payments to Medicare providers, and Med. Adv. Providers.
Who may we ask? , Obama, will now pay the $$$$$ difference? Seniors on FIXED INCOMES.
The Feds came up with "MED-I-CARE!" and forced anyone 60+ (on Soc. Sec.) on it, and demanded they pay a monthly premium. But then, since Medicare does not cover anything, Seniors are forced to carry Med-gap and Supplimental Ins. Again, at more cost to Seniors.
Now. Obama wants to cut back on what Medicare actually pays out to providers, which means, All Ins. Premiums for Seniors who are not even barely making it, will no longer be able to get their meds, go to Dr. because they can't afford the Ins. Premiums or the additional cost to them -
So thank you Obama - It would have been easier if you would have just announced that anyone 60+, must report to our Centralized Termination Center -
RAISE TAX ON "SIN" PRODUCTS - Look out Soda, EVIL BOOZE, Restaurants, Grocery stores, etc - You are "SINFUL" In eyes of the all powerful Obama!
If it was not for sugar in soda pop, we would not have fat kids with high blood pressure and other ailments. If we don't have Booze, then all livers would be saved, etc, etc, etc, - ramble ramble! Ok, Obama - you have raised the taxes, people can't afford to buy these products or shop/eat at these grocery stores or restaurants, so what happens. - Of course, they close - lay off all employees, they gone on Unemploymnet, Obama goes and seeks more money to hold Unemployment together - Sound familiar??????
Obama, FYI
1) AIR WE BREATH - NOT-PURE - UN-CLEAN -CONTAMINATED BY Pollution, Chemcials sprayed in to air, smoke stacks, - and LOADED WITH CARCINOGENS -
2) OUR WATER WE DRINK - NOT PURE - UN-CLEAN-CONTAMINATED, our waters use to be clear aand blue - now they are nothing but decaying sespools. You have acid-rain, fertilizers both res./commercial and sewage dumped in our waters - DON'T FORGET THE CHEMICALS THEY ADD AT THE PROCESSING PLANTS - CHEMICALS, CHEMICALS - YUM OUR WATERR TASTES GOOD
3) OUR FOOD - NOT PURE- UN-CLEAN- CONTAMINATED - pesticides for bugs, fertilziers for growth
Obama, Get off your high horse - people will get sick, some will develope cancer, some heart conditions, and who knows what else. But don't you dare claim "if they would have lead healthy lives" -
Until our air is 100% clean, our food and water 100% clean, people will get sick and die just from the Air, Water,and Food we require to live!
Obama, your Lucky no one has sued you for wrongful death! I mean as our President, are you not responsible for the department that was set up to clean our air, water and food?
Obama, TERMINATE THE ENTIRE EPA - Top to Bottom - POOR JOB PERFORMANCE! Obviously, they should be fired, they can't seem to do the job they are paid so well to do! - Reply to this comment
- Yes, how Obama will fund for this so-called health care reform is a big part of the problem. However, doesn't anyone realize the real issue . . . the federal government will now be telling us what doctors we can go to, what perscription drugs we can take and who will take precedence. Who are they to manage something so vital and personal as the health care of each American - they can't even run the country properly.
Under this new plan, if both a 50-year-old and an 80-year-old need a heart operation, they will choose the 50-year-old first. Isn't the government now playing God?? - Reply to this comment
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- The proposal is for a public option. If you CHOOSE the public option, they will have the same say over care as any private option. Health care is already being rationed and controlled by the HMOs, I guess some like having office workers decide their medical care.
- You can always get a private health insurance on top of a public one. That's how they do it in other countries.
- The problem is not only how to get the money. The problem is they are using government numbers to estimate the $1 Trilion needed. These are the same people that estimated $1B will last until October for 'Cash-for-Clunkers'. The same people that said unemployment will reach 8% if we do not pass the stimulus package...
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