Thursday, March 25, 2010

Reconciliation

The Washington Post takes a look at what's inside the health care reconciliation bill:
Although much smaller than the bill Obama has signed, the measure would make major changes to that legislation to bring the final package in line with a compromise worked out between House and Senate leaders. Federal subsidies would be expanded slightly for people who need help buying insurance, and the coverage gap known as the doughnut hole in the Medicare prescription drug program would be closed by 2020. Seniors who fall into the doughnut hole this year would be eligible for a $250 rebate.

The measure would also change the annual penalty on individuals who do not purchase insurance to at least $695 a year or as much as 2.5 percent of annual income. And it would dramatically increase the penalty facing employers who do not offer affordable coverage, to as much as $2,000 per worker.

The most significant change, however, would be the method of financing the overhaul. A new 40 percent excise tax on high-cost insurance policies would be delayed until 2018 and replaced by a new tax on the nation's highest earners. Families earning more than $250,000 a year would for the first time have to pay a 3.8 percent Medicare payroll tax on capital gains, dividends and other investment income.
In other words we find increased subsidies (which are simply wealth transfers), penalties of at least $695 for failing to purchase a product from health insurance corporations (or 2.5 percent of annual income, which is more than $695 for anyone making at least $27,801), penalties for employers who do not offer insurance (a great disincentive to hiring at a time of recession and further entrenchment of the employer-health insurance relationship, which should be viewed as the opposite of reform), and a further delay for taxes on high-cost insurance (which are hated by Democrat-allied unions and will probably never happen in 2018 or any other time) in exchange for higher taxes on the rich, who have far fewer votes than the rest of the population.

This should work out splendidly.

2 comments:

Plans to Prosper said...

How does the bill treat people who are uninsured because they are unemployed? If they are required to purchase individual insurance during the time they are unemployed, the bill might slowly eat away at the employer-insurance relationship.

A company can pay $5k+ insurance premiums or $2k in fines; that's a no-brainer. Add in an increasing number of new employees who already have their own insurance because they were required to buy it while unemployed, and within a few years I can see a very large portion of American workers not having employer-based insurance. Something good might come of the bill after all.

Colin said...

How does the bill treat people who are uninsured because they are unemployed? If they are required to purchase individual insurance during the time they are unemployed, the bill might slowly eat away at the employer-insurance relationship.

Perhaps. But I suspect that once they are employed again they will dump their insurance and go with whatever their employer offers.

A company can pay $5k+ insurance premiums or $2k in fines; that's a no-brainer.

Not sure it's quite that cut and dried. Remember, employers don't offer insurance out of the goodness of their hearts, they do it to attract employees. After all, right now the penalty for not offering insurance is zero, yet is still standard practice.