Free Markets, Free People


Harry’s Version Of The Health Care Monstrosity

Over 2,000 pages (yeah, nothing can be hidden in there, can it?) the bill sets up at least 370.2 billion in new taxes over the next 10 years:

1. 40% excise tax on health coverage in excess of $8,500/$23,000 ($149.1 billion)
2. Employer W-2 reporting of value of health (negligible revenue effect)
3. Conform definition of medical expenses ($5.0 billion)
4. Increase penalty for nonqualified health savings account distributions to 20% ($1.3 billion)
5. Limit health flexible spending arrangements in cafeteria plans to $2,500 ($14.6 billion)
6. Require information reporting on payments to corporations ($17.1 billion)
7. Additional requirements for section 501(c)(3) hospitals (negligible revenue effects)
8. Impose annual fee on manufacturers & importers of branded drugs ($22.2 billion)
9. Impose annual fee on manufacturers & importers of medical devices ($19.3 billion)
10. Impose annual fee on health insurance providers ($60.4 billion)
11. Study and report of effect on veterans health care (no revenue effect)
12. Eliminate deduction for expenses allocable to Medicare Part D subsidy ($5.4 billion)
13. Raise 7.5% AGI floor on medical expenses deduction to 10% ($15.2 billion)
14. $500,000 deduction limitation on taxable year remuneration to health insurance officials ($0.6 billion)
15. Additional 0.5% hospital insurance tax on wages > $200,000 ($250,000 joint) ($53.8 billion)
16. Modification of section 833 treatment of certain health organizations ($0.4 billion)
17. Impose 5% excise tax on cosmetic surgery ($5.8 billion)

That’s according the non-partisan Joint Committee on Taxation (via Tax Prof).

According to the CBO, this turkey comes in at 849 billion over 10 years. Let me again stress that the cost is a bogus cost because of the way the spending is structured. CBO is limited to a 10 year window. So what it is saying is that within that 10 year window, if passed exactly as written and with no changes, it will cost that much over that 10 year span. It isn’t chartered to look beyond that. So, over the years, the Democrats have learned how to use that restriction to sell budget busters as deficit reducers.

Here’s how. See all those taxes above? They begin immediately. However the major costly programs don’t begin until 2014. Consequently, the taxes are going to have a plus effect on the deficit over those first few years. Then, as the spending kicks in, since we’ve already pre-paid it with the taxes, it will appear as much less spending than it really is. Once outside that 10 year window, it explodes. The real cost, not the gamed cost to get past the CBO and attempt to fool the public, is estimated to be about 1.8 trillion over 10 years – or twice what is being claimed – and that’s if nothing changes or is added.  And it doesn’t include the 250 billion “doc fix” which will put it over 2 trillion.

One other thing to note – all the taxes above are only part of the plan to “pay” for this. Don’t forget the 500 billion in cuts to Medicare and Medicaid as well (cuts that will never happen at the size projected if at all).

It’s pretty simple when you look at the numbers – this is another huge, costly program we can’t afford and we don’t need – at least in the form Congress insists on putting it in.  Common sense reform – ok.  But common sense reform doesn’t cost 2 trillion in “deficit reducing spending”.

I still can’t imagine anyone actually believing 2 trillion in new spending will reduce the deficit.

But they are – hook, line and sinker.

~McQ

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9 Responses to Harry’s Version Of The Health Care Monstrosity

  • MiniTru is flogging this one VERY hard.  I think they know that the clock is running out.

  • I think you have just hit on one of the great unspoken features of this entire program; the front-loaded taxes and the effect they will have in masking the true size of the exploding federal deficit.  When the benefit costs start to appear in ’13/’14 Obama will be safe in a second term.  And with some creative massaging of the numbers, the costs can be held off the federal ledger until after the November ’14 miderm elections.  What happens after that is likely not the problem of anyone currently in any leadership positions on The Hill so they need not worry; there will be plenty of lobbying and consulting work for them to “resign” for.

    The coming deficit numbers (thank you CBO) are a feature, not a bug.

    • Indeed this front-loaded taxes/back-loaded expenses reminds me a lot of those mortgages where you pay only the interest for the first five years, after which the payment inflates dramatically, the idea being that you refinance right before the payment goes up because your house has grown in value.  Gee, what could possibly go wrong with a setup like that?

      • I really like your “interest only” analogy.  Additional evil comes with another Saturday night vote.  We have complained about Friday evening document dumps, but now we get Van Jones, the House vote, and the Senate vote on Saturday night.  The last major government event on a Saturday night, that I recall,  was Nixon firing Cox.  That was named the “Saturday night massacre”.  I wonder what this one will be called.
        Rick

    • The purpose of that isn’t the elections as much as ensuring the program gets entrenched before people realize what a mistake it is.

      The true costs will be obscured for 3-5 years give or take because of the pre-funding.  When the real numbers start to hit, the criticism next 3-5 years will be deflected as just a management stumble.

      The new system will be in place 5 to 10 years or more before people agree on true cost of it all.  By then reversing course even partially will be not an option.

      Obama has outdone Clinton in terms of growing government and moving towards socialism because he isn’t making his re-electability a priority.  His job is to be a lightning rod.  In fact, this healthcare monster is more appropriately laid at the feet of Reid and Pelosi and congress.  But Obama being a lightning rod is providing cover for them from backlash.

  • That is quite evil. I think I’d prefer an honest single payer system to this sort of stuff.

  • Does anyone honestly believe that if we start collecting taxes for this now that any of that money will still be around and available when the program starts up in 4 years?