The Biggest Threat to Obama's Health Care "Reform" - Reality - Page 36

Here's the story: one of the provisions in the new health care law forces companies to treat the current subsidies for retiree health benefits as taxable income. This strikes me as dumb policy; there's not much point in giving someone a subsidy, and then taxing it back, unless you just like doing extra paperwork. And since the total cost of the subsidy, and any implied tax subsidy, is still less than we pay for an average Medicare Part D beneficiary, we may simply be encouraging companies to dump their retiree benefits and put everyone into Part D, costing us taxpayers extra money.

But this is neither here nor there, because Congress already did it. And now a bunch of companies with generous retiree drug benefits have announced that they are taking large charges to reflect the cost of the change in the tax law.

Henry Waxman thinks that's mean, and he's summoning the heads of those companies to Washington to explain themselves. It's not clear what they're supposed to explain. What they did is required by GAAP. And I've watched congressional hearings. There's no chance that four CEO's are going to explain the accounting code to the fine folks in Congress; explaining how to boil water would challenge the format.

Obviously, Waxman is incensed because this seems to put the lie to the promise that if you like your current plan, nothing will change. But this was never true. Medicare Advantage beneficiaries are basically going to see their generous benefits slashed, retiree drug benefits suddenly cost more and may now be discontinued, and ultimately, more than a few employers will almost certainly find it cheaper to shut down their plans. If Congress didn't want those things to happen, it should have passed a different law.

If Congress thinks that it made the right tradeoffs--or at least, justiiable choices--then our Congressmen should step up and accept responsibility for what they've done. At the very least, I think we can ask that they refrain from trying to force companies to join them in denying reality by threatening congressional investigation of any company who dares to notify investors that this thing is going to cost them money.

One of the moderately interesting things I’ve noticed about the rhetoric of those who have badgers in their pants about Obama and/or the Democrats in Congress and/or the new health care laws is how everything that happened or has happened during the passage of the health care bills into law has invariably meant doom for the Democrats, like so:

“Obama and the Democrats are trying to pass health care! That’ll cost them in November! No, wait! Now Scott Brown has been elected and health care reform is dead! That’ll cost them in November! No, wait! Now health care reform has passed and is the law of the land! Excellent! That will cost them in November!”

Now, on one hand I do admire the commitment to a single message, and wonder how far those who use it would be willing to exercise it (“The November election results are in and the Democrats didn’t lose a single seat in the House! Fantastic! That’s going to cost them for sure!”). On the other hand, if your response to everything is “that’s going to cost them in November,” at some point you should be willing to entertain the notion that other people may think your single note response to every political event bespeaks a certain lack of complexity in your thinking process.

Do the Democrats face the possibly of losses in the mid-term elections? Certainly they do, as typically does any majority party in mid-term elections; it’s a common enough occurrence that it’s notable when it doesn’t happen (for example, in 2002, or, for you Democrats out there, 1934). That being the case, it doesn’t take special prognostication skills to suggest the Democrats will likely lose seats come November. The question is whether, in the case of passing health care reform into law, it would cost them more than if they had failed to pass it (or if they had done nothing about health care at all).

My own personal expectation (as noted before) is that it’s far better for the Dem’s political fortunes to have passed it than not; people may argue the benefit of the health care reform now that it’s passed, but the fact is no one likes a loser (see: mid-terms, 1994). I’m willing to entertain arguments that the Democrats were better off not passing the bill, unlikely though I think that is, but the apparent enthusiasm for the “everything they do is equally and apocalyptically bad for them” argument is not one I find particularly compelling, or one that suggests to me that the person fronting it has much more than a mantra going for them.

Likewise at this point I find people hauling out the latest convenient-to-their argument poll about the popularity of health care reform and from that making predictions of the GOP retaking the Hill to be equally silly; it’s the end of March and the elections are in the beginning of November, and between now and then are seven full months. I certainly understand the desire of some folks to declare the results of the elections now, especially when they’ve called it for their side. But inasmuch as the demise of health care reform was also called, and that just two months ago, not seven, I’m sure most of you will understand when I say I’m personally going to wait a bit to call the 2010 elections. Seems the prudent thing to do.

Add it up and the government is counting on squeezing an extra $1.2 trillion over 10 years from a tiny sliver of taxpayers who already pay more than half of all individual taxes.

It won't work. It never works.

Punitive tax rates on high-income individuals do not increase revenue. Successful people are not docile sheep just waiting to be shorn.

In short, the evidence is clear that when marginal tax rates go up, the amount of reported incomes goes down. Economists call that "the elasticity of taxable income" (ETI), and measure it by examining income tax returns before and after marginal tax rates claimed a bigger slice of income reported to the IRS.

The evidence is surveyed in a May 2009 paper for the National Bureau of Economic Research by Emmanuel Saez of the University of California at Berkeley, Joel Slemrod of the University of Michigan, and Seth Giertz of the University of Nebraska. They review a number of studies and find that "for an elasticity estimate of 0.5 . . . the fraction of tax revenue lost from behavioral responses would be 43.1%." That elasticity estimate of 0.5 would whittle the Obama team's hoped-for $1.2 trillion down to $671 billion. As the authors note, however, "there is much evidence to suggest that the ETI is higher for high-income individuals." The authors' illustrative use of a 0.5 figure is a perfectly reasonable approximation for most purposes, but not for tax hikes aimed at the very rich.

For incomes above $100,000, a 2008 study by MIT economist Jon Gruber and Mr. Saez found an ETI of 0.57. But for incomes above $350,000 (the top 1%), they estimated the ETI at 0.62. And for incomes above $500,000, Treasury Department economist Bradley Heim recently estimated the ETI at 1.2 which means higher tax rates on the super-rich yield less revenue than lower tax rates.

In short, the belief that higher tax rates on the rich could eventually raise significant sums over the next decade is a dangerous delusion, because it means the already horrific estimates of long-term deficits are seriously understated. The cost of new health-insurance subsidies and Medicaid enrollees are projected to grow by at least 7% a year, which means the cost doubles every decade to $432 billion a year by 2029, $864 billion by 2039, and more than $1.72 trillion by 2049. If anyone thinks taxing the rich will cover any significant portion of such expenses, think again.

Originally Posted by MJ1970

More reality ahead for ObamaCare, the U.S., deficits and the eventual tax hikes for the middle class (and possibly lower): "The Rich Can't Pay for ObamaCare":

Originally Posted by BRussell

How about the Heritage Foundation, who (like most other Republicans until recently) were proposing Romneycare/Obamacare, including an individual mandate as recently as 2003.

But who knows, with this activist conservative court we have now, it wouldn't surprise me if they did strike it down.

My name is Stuart Butler. I am Vice President of Domestic and Economic Policy Studies at The Heritage Foundation. The views I express in this testimony are my own, and should not be construed as representing any official position of The Heritage Foundation.

Originally Posted by Wormhole

The thread includes "Reality" in the title. Yet so many posts deal with what could happen in the future. The future is not reality yet.

For everyone who believes that they can predict the future: join a psychic network.
Your crystal balls can be broken easily, be careful now.

"More reality ahead" ... yeah rite.

Originally Posted by MJ1970

Indeed you are right. And this applies to use of the word "reform" to describe what ObamaCare has done. And the warnings about future prediction also apply to the glorious, positive and optimistic predictions of what proponents think ObamaCare will bring.

That said, some things are more easily predictable based on logic, reason, facts, evidence and historical experience.

Originally Posted by Wormhole

You mean like a comparison to the popularity of Medicare and Social Security?

Originally Posted by MJ1970

I don't think anyone is really disputing the idea that these programs (ObamaCare) included won't be wildly popular with those who are net beneficiaries. People like to get stuff for free. Surprise.

To me the debate is around two things: a) whether the promises made and benefits claimed will actually ever materialize and b) whether the thing will be a net improvement overall...in the long term and for everyone or most people...including all factors. I'm guessing the answer will be no for both of those because, well, reality will get in the way of wishful thinking and good intentions.

Originally Posted by Wormhole

Or reality will show that you are completely wrong.

Originally Posted by Wormhole

Yours an my statements are equally irrelevant. A discussion of how thing will turn out is a complete waste of time.

Originally Posted by Wormhole

Tomorrow AlQaeda will explode a nuclear device in your anus.

Originally Posted by MJ1970

Possibly, but not probably.

Originally Posted by Wormhole

Arrogance is for the uninformed.

Over the past year, "there has been plenty of fear-mongering and overheated rhetoric" about the health care law, Obama said. Now, "those same folks are still shouting about how the world will end because we passed this bill. ... They say it's the end of freedom as we know it."

"So after I signed the bill, I looked up to see if there were any asteroids headed our way. I looked at the ground to see if cracks had opened up in the earth. It turned out to be a pretty nice day. ... Nobody had pulled the plug on Granny. Nobody was being dragged away to be forced into some government plan."

Obama also dismissed polls showing the country's continued sharp divide on the issue.
"It's only been a week" since the bill was signed into law, he said. "Before we find out if people like health care reform, we should wait to see what happens when we actually put it into place. Just a thought."

Over the past year, "there has been plenty of fear-mongering and overheated rhetoric" about the health care law, Obama said. Now, "those same folks are still shouting about how the world will end because we passed this bill. ... They say it's the end of freedom as we know it."

"So after I signed the bill, I looked up to see if there were any asteroids headed our way. I looked at the ground to see if cracks had opened up in the earth. It turned out to be a pretty nice day. ... Nobody had pulled the plug on Granny. Nobody was being dragged away to be forced into some government plan."

Obama also dismissed polls showing the country's continued sharp divide on the issue.
"It's only been a week" since the bill was signed into law, he said. "Before we find out if people like health care reform, we should wait to see what happens when we actually put it into place. Just a thought."

Originally Posted by MJ1970

Barack Obama is so darn cute when he's being smug, condescending, dismissive and contradictory:



Does he even know what he's saying or does he just read the words?

• Young adults will be able stay on their parents' insurance until their 26th birthday.

• Seniors will get a $250 rebate to help fill the "doughnut hole" in Medicare prescription drug coverage, which falls between the $2,700 initial limit and when catastrophic coverage kicks in at $6,154.

• Insurers will be barred from imposing exclusions on children with pre-existing conditions. Pools will cover those with pre-existing health conditions until health care coverage exchanges are operational.

• Insurers will not be able to rescind policies to avoid paying medical bills when a person becomes ill.

• Lifetime limits on benefits and restrictive annual limits will be prohibited.

• New plans must provide coverage for preventive services without co-pays. All plans must comply by 2018.

• A temporary reinsurance program will help offset costs of coverage for companies that provide early retiree health benefits for those ages 55 to 64.

• New plans will be required to implement an appeals process for coverage determinations and claims.

• Adoption tax credit and assistance exclusion will increase by $1,000. The bill makes the credit refundable and extends it through 2011.

• A 10 percent tax will be imposed on amounts paid for indoor tanning services on or after July 1.

• Businesses with fewer than 50 employees will get tax credits covering 35 percent of their health care premiums, increasing to 50 percent by 2014.

Companies with 50 or more employees must offer coverage to employees or pay a $2,000 penalty per employee after their first 30 if at least one of their employees receives a tax credit. Waiting periods before insurance takes effect is limited to 90 days. Employers who offer coverage but whose employees receive tax credits will pay $3,000 for each worker receiving a tax credit.

Insurers can no longer refuse to sell or renew policies because of an individual's health status. Health plans can no longer exclude coverage for pre-existing conditions. Insurers can't charge higher rates because of heath status, gender or other factors.

Originally Posted by MJ1970

"NHS postcode lottery system, as highlighted by case of Alan Rice, of Mossley Hill, must change"

Originally Posted by MJ1970

"Rising costs of health care demand reality check from everyone"

Originally Posted by franksargent

I'll hazard a quess that you kind of don't exactly like or approve of health care?

Did I get that right?

Originally Posted by MJ1970

Not at all. What makes you come to that conclusion?

Originally Posted by franksargent

So you do like and approve of health care?

Originally Posted by MJ1970

Of course! What would make you think otherwise?!?! \

Originally Posted by MJ1970

Of course! What would make you think otherwise?!?! \

Originally Posted by tonton

Just out of curiosity? Do you approve of any healthcare access at all to someone who can't afford it? And if so, how do you suggest that should work?

Originally Posted by jazzguru

Since health care is not a right, nor is it expressly enumerated in the Constitution as the responsibility of the federal government, it falls upon the individual states, private industry and charity to render aid per the 10th Amendment.

Since health care is not a right

Originally Posted by jimmac

Shouldn't it be? I mean the coonservatives here are always talking about what's right or doing the right thing. Isn't making sure our countrie's citizens are healthy even if ( especially ) they can't afford it? Wouldn't that be the right thing to do?

Originally Posted by tonton

Just out of curiosity? Do you approve of any healthcare access at all to someone who can't afford it? And if so, how do you suggest that should work?

Originally Posted by jimmac

Shouldn't it be? I mean the coonservatives here are always talking about what's right or doing the right thing. Isn't making sure our countrie's citizens are healthy even if ( especially ) they can't afford it? Wouldn't that be the right thing to do?

Originally Posted by jimmac

Shouldn't it be? I mean the coonservatives here are always talking about what's right or doing the right thing. Isn't making sure our countrie's citizens are healthy even if ( especially ) they can't afford it? Wouldn't that be the right thing to do?

Originally Posted by jazzguru

Legislating morality is not only dangerous, it is unconstitutional.

Originally Posted by tonton

Which is why the vast majority of Republicans and Tea Partiers support national anti-abortion and anti-same sex marriage legislation. Right.

Originally Posted by BR

Checkmate.

Originally Posted by tonton

Which is why the vast majority of Republicans and Tea Partiers support national anti-abortion and anti-same sex marriage legislation. Right.