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Health Care Reform for All, But Paid For by Few

With the stroke of his pen, the President signed into law the largest reform of the health care system since Medicare and Medicaid was enacted in 1965. Before signing the bill, the President proclaimed that expanded health insurance benefits for all and subsidies for those who could not afford coverage would now be provided. The best part: it was all "paid for."

It's hard to argue against some of the expanded benefits in the new law. It's the "paid for" part that troubles me. Specifically it's who will be paying.

According to the new law, individuals who earn over $200,000 (over $250,000 for families) and folks who have investment earnings will pay additional taxes on their income to pay for the expanded benefits. Specifically, beginning 2013 the Medicare tax rate would increase by 0.9 percentage points - from 1.45% to 2.35% - on earnings over $200,000 for individuals and $250,000 for families. And for the first time, a special additional tax of 3.8% would be imposed on investment income. So a family of four with earned income of $350,000 and investment income of $50,000 would pay additional taxes of about $2,800 a year, while a family of two earning $240,000 would pay no additional tax.

By doing this, the message is that it's fair for folks who earn over a certain amount to be primarily responsible for paying for these expanded benefits and for those who earn under the amount to have no responsibility to pay a fair share. The takeaway from this is that it's good to be successful, just not too successful or else you'll be taxed excessively.

In my view, it would be fairer to apply a smaller percentage additional tax to a larger number of taxpayers, such as those earning over three times the poverty limit. If we are to believe that this health insurance reform is vital to the economic security of our country and is the right thing to do, then all Americans who can contribute should do their part.

Unfortunately, the bill that was signed into law was the product of a grotesque political process. It appeared to be less about health care and more about a political party's blatant effort to curry favor with its voting constituency. The result may please the masses but it will place the burden on the few. A gap in personal accountability this wide can result in unintended consequences. Let's see what the result of this gap will be.

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