Who Pays for Health Care Reform?
After looking at all the health care benefits we’ll get under the Patient Protection and Affordable Care Act and the promise of reasonably priced care, no one could be blamed for thinking “this is too good to be true!” In fact, it is too good to be true. However, we’ve been told not to worry: rich people and greedy companies along with ‘savings’ will take care of it for us. Let’s “follow the money” and see who’s really paying for this.
The two industries taking the biggest direct hits are drug manufacturers and insurance companies. Drug makers are required to pay $16 billion in fees. In addition, to close the Medicare Part D doughnut hole, drug companies will be required to discount brand name drugs 50%. Health insurers have been asked to cover many more people with medical conditions not previously covered on ordinary health polices adding considerable cost to their operations. In addition, they’re responsible for $47 billion in fees.
Medical device manufacturers have also been directly hit. They must pay an excise tax of 2.9% for commonly used items such as wheelchairs, prosthetics, and syringes used by diabetics, as well as any new innovative medical device they make available to the public. Also targeted are tanning salons who must pay a 10% national sales tax for their services.
All businesses must meet payrolls, pay operating expenses, and make a profit for investors. This means the consumer must pay higher prices for drugs, insurance and medical devices to cover these mandatory expenses.
Who’s really paying these taxes? It’s us ordinary people.
Under the health care reform act, people whose incomes are 133% of the Federal Poverty Level or below, over 16 million people, will receive health coverage under an expanded state-managed Medicaid program. Initially, the federal government will subsidize the states’ expenses but this will be phased out leaving the states to cover the costs in the end.
Who’s paying for this? It’s us ordinary taxpayers.
Medicare payment rates to doctors and hospitals will be cut an additional 30% over the reduced payments they receive now for Medicare services. Currently, medical providers make up the difference between Medicare reimbursements and their real costs by charging everyone else more and this could continue. However, the American Medical Association reports that doctors have already stopped accepting new Medicare patients and the trend is accelerating as a result of the new law.
Who’s really paying for this? It’s ordinary people and the Medicare patients who can’t find doctors to treat them.
Currently, more than half of U.S. income tax revenues are paid by just 5 % of the tax payers. Our new health care reform law will raise the top 2 tax levels from 33/35% of their income to 36/39.6%. In addition, people whose incomes are far less, at $200,000 ($250,000 filing jointly) but who are, nonetheless, labeled ‘rich’, are being taxed an additional 3.8% on their investment incomes (rental incomes, dividends, capital gains, annuities, etc). These people will also see their Medicare payroll tax rise from 1.45% to 2.35%.
It’s a fact that high taxes discourage investments in new companies, stocks, bonds, buildings, and enterprises. On top of that, higher tax rates never result in the expected higher tax revenues. People deliberately stop working and investing if this raises their income into a higher tax bracket. The result is fewer companies, industries, and start-up enterprises resulting in fewer job opportunities.
Who’s really paying? It’s us ordinary people.
Ordinary people selling real estate, stocks, or bonds face a 20% tax on their capital gains, a 33% raise over the current 15%. If their profit exceeds $250,000 (very possible if they’re selling a family home and retiring with the proceeds) an additional 3.8% is charged against the overage.
Ordinary people who have considerable medical expenses will need to spend 10% of their incomes to qualify for a medical tax deduction instead of the current 7.5% .
Ordinary people under Medicare who require home health care will see the federal budget for this reduced by $40 billion.
Who’s really paying? Again, it’s us ordinary people.
As an object lesson, Massachusetts also implemented government health reform legislation that they hoped would lead to more and better health care at more affordable prices. Their objectives were the same as the Patient Protection and Affordable Care Act’s; and, in general, they used the same methods to achieve their goals. After less than 4 years into their program, their health care cost is not only higher than the rest of the nation, it is rising faster as well. In addition, their health insurance companies are struggling, emergency rooms are crowded because doctors are unavailable, and hospitals are in danger of closing. In short, it’s us ordinary people who are paying for so called health care reform.