Obama, Healthcare Reform and the Cost of Good Health

In a move to close the budgetary gaps of the administration’s plan to overhaul healthcare, the House and Senate are considering increasing taxes in several areas. One alternative being debated is whether or not to increase the amount of taxes paid on sugary beverages. Several states already impose higher taxes on beverages such as soft drinks and have expanded these taxes to cover candy and other junk food.

Proponents suggest that a marginal increase of three cents on products high in sugar could help lower federal health care cost by decreasing the consumption of these products. However, opponents of the tax argue that the resulting decline in consumption and production of the products would result in a smaller tax base, decreasing the amount of income and payroll taxes collected. These results would be negated by the governments proposed increase in payroll taxes.

The Hospital Insurance Trust Fund is primarily financed by payroll taxes. These funds help pay for the inpatient care cost of those covered under Part A of Medicare. Two options are being considered under this plan.

The first option would be to raise the tax rate by 1 percent. This would increase the payroll tax paid by employers and employees from 1.45 percent to 1.95 percent. It would increase the payroll tax paid by the self-employed from 2.9 percent to 3.9 percent. Under this option the government would generate an extra $592.2 billion over the next 10 years.

Alternatively, the tax increase could only be applied to those making more than $150,000 and be adjusted annually for inflation. While this approach would avoid increasing the tax burden for lower and middle income earners, it would only provide about 13 percent of the revenues provided by the first option or $77.2 billion over the same period.

While the increase in payroll taxes will add to the HI Trust Fund substantially, some contend that the higher tax rates will reduce employee’s incentive to work. They say that this will also result in people looking for alternative nontaxable forms of income. On the contrary, a number of people argue that it may actually result in people working more as to maintain their standard of living because the increase in taxes would result in a lower after-tax income.

Although it has been agreed upon that healthcare reform is much needed, the question of who will foot the bill remains. It would appear that the proposed increases would have a higher affect on lower and middle income earners since the goods being considered are consumed in higher quantities by those classes. The increases in payroll taxes would also be a heavier burden on those earning the least in addition to negatively affecting the self employed.

It leaves one to ask, do the ends really justify the means.

Congressional Budget Office
Budget Options Volume 1, Healthcare


Do Americans Want Universal Healthcare?

ANALYSIS The Merced Sun-Star reports California legislators are currently debating a universal healthcare bill, Senate Bill No. 810, which brings up the question why Congress is not debating the issue at the national level.

According to ThinkProgress, Americans overwhelmingly support universal healthcare in poll after poll, but there may be a lack of political will to address the problem. In other words, our elected representatives don't want to take on the insurance industry in such a sweeping way.

Americans are divided on President's Obama's piecemeal approach to reforming the system, but no one is too sure about the Republican response that it is better to privatize the system with vouchers and tax credits.

Following are some of the arguments for and against universal health care.

Those who support it argue that under a universal healthcare plan:

* Everyone would have health insurance coverage. This is proper because adequate health care is a fundamental human right, not a commodity to be bartered on the free market.

* Everyone would have the same access to comprehensive coverage and necessary procedures, according to Physicians for a National Health Program.

* Likewise, everyone would be able to choose an insurance provider and hospital from a large list that would include all insurance companies and all hospitals since everyone would be a part of the same plan.

* Spending would not be increased; to the contrary, costs will be reduced, according to the Congressional Budget Office. Even President Obama's piecemeal reform approach has savings in the budget. It's the current system that is spiraling out of control, not government intervention.

* A single payer system would eliminate the middle man. The insurance company would no longer dictate what you must do because the doctor and patient will make that decision together. This will restore a closer, more traditional doctor-patient relationship.

Those who oppose it argue that under a universal health care plan:

* There would be no free market reforms, according to the New York Sun. For example, costs have decreased in past years for non-essential medical procedures such as lasik eye surgery and cosmetic implants because they are subject to a competitive market.

* While we may not see the benefits right away, transferring health care tax benefits to individuals from employers and giving more tax credits to individuals will result in more affordable coverage in the long run, as noted by U.S. Sen. Tom Coburn, R-Okla.

* Universal healthcare is a form of slavery. According to Reason, Sen. Rand Paul, R-Ky., believes that under a universal health care system, he will be forced out of his home by doctors into hospitals to undergo procedures he opposes. This has been derided as absurd by most pundits.

* Universal health care is a government takeover. According to Hot Air, Rep. John Conyers, D-Mich., repeats the warnings of Ronald Reagan from 30 years ago that healthcare reform will destroy American freedom. It didn't happen then or now, but the results are not yet conclusive.

* Forcing people to pay into a universal healthcare system is unconstitutional. At least two dozen lawsuits have been filed in federal courts challenging President Obama's version of reform on this issue alone. The courts are divided. As of mid-May 2020, three states have ruled Congress did not exceed its powers by ordering mandated premiums, and two have ruled it is unconstitutional. All are on appeal to higher courts, and the issue will likely reach the U.S. Supreme Court next year.

It seems likely that if President Obama's healthcare reform measures are overturned in the near future by the Supreme Court, there may well be a genuine push for universal healthcare as costs continue to spiral out of control, or we may fall back on a true free market approach.