March 30, 2010

The real reason for the health care reform push - money

They say follow the money. If you follow the money and find it, you inevitably discover the real reason that things are unfolding the way they are. On the surface things might not make sense, but the money trail nearly always brings the underlying reasons to light. The same is true with health care reform.

Why, in the face of clear and present opposition to a massive cost increases, in the face of a persistent recession, high unemployment and unsustainable debt, for little if any political or national gain,  would the Democrats have soldiered on with this legislation? Was it political self-delusion?  Perhaps somewhat, but that old adage, follow the money has never been more appropriate.

Sure, they'll tell you that it was all about helping those who couldn't get the medical help they needed due to financial restrictions. While that may have been the rationale for many Democrats, what was preventing them from even considering more efficient ways to do so? Was it just because they were Republican ideas? What was the rush? If you can accomplish the same thing for a tenth of the price, wouldn't you want to even have considered if that was possible? Never mind if the idea is stupid or faulty. You're telling me Democrats, that even entertaining the possibility was counter-productive?  That wasn't about practicality.  That was either ideologically, politically or else financially motivated.

True? Then your reasons were disingenuous and belied your real motivation. The true motivation can be found, as always, by following the money.

In this case the money comes in the form of tax receipts. Before following the money trail, here's why this is important. Democratic party leaders have become distorted over the last century in terms of objectives. What FDR did in the throes of the Great Depression, right or wrong, was driven by the need to solve a national economic emergency. The idea of making sure that families didn't starve and people out of work had a social safety net seemed like an unassailable idea. The motives were pure, even though the means may have been misguided.  All in all as Sean Trende and Jay Cost pointed out, circumstances and the rationale were quite different than now.

Politicians shouldn't be judged on good intentions. To do so among other things, allows their motives to be co-opted by the less virtuous. Which brings us to outcome-based assessment of political activity and back to the present day issue of letting the infirm go unattended. No one wants that. But there are a number of ways to prevent it. How you choose to do so is determined in part by your personal motivations.

Money New Taxes
  • Americans will be required to have health insurance or pay a fine of up to $695 starting in 2016 with rates beginning at $95  in 2014
  • Employers with more than 50 employees  will be required to provide coverage for employees or be fined $750 per employee or $2000 per employee under the revisions to the package (that's not validated yet so far as I know)
  • For smaller businesses  with less than 25 employees, to help pay for the cost of coverage, they may qualify for a tax credit of up to 35% of their contribution towards premiums.  But the credit is temporary from 2011 to 2013
  • The  “Cadillac tax” would be imposed on plans provided by employers that exceed a yearly cost of $10,200 for a single person or $27,500 for a family 
  • The act includes a Medicare tax on higher-income individuals for individuals making more than $200,000 and couples making more than $250,000.
  • There's 40% excise tax on health coverage in excess of $8,500 for individuals or $23,000 for families
  • There's an annual fee on manufacturers and importers of branded drugs  starting immediately
  • There's also an annual fee on manufacturers and importers of some medical devices, also starting immediately
  • There's a 50% reduction in the  amount of executives' compensation that a health plan can deduct from its corporate income taxes 
  • There's a 5% excise tax on cosmetic surgery and similar procedures 
Yes, they said they needed to pay for this.  What?  You thought it was free health care?  Even if you get covered and you didn't before, companies are going to take a hit.  This means they will offshore what labor they can, and what they can't, those costs will be past on to consumers in the form of price inflation.

But even with the tax increases, they aren't controlling costs.  Either they control the costs (which cuts back on the already phony universal aspect of this act) or those tax increases will have to grow far beyond what they've already listed above.  You might not see the impacts before 2014, but by 2024 it's going to be a nightmare.

Most certainly, more to come.

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