Research Briefing

When Obama Talks About What “Health Insurance Reform” Will Do For You, Here Are 8 Things He Doesn’t Mention

#1: THE OBAMA-REID HEALTH INSURANCE TAX

Senate Dems’ Bill Includes Tax On Health Insurance Policies Over $8,000 Per Individual And $21,000 Per Family, Raising Premiums On Many Americans. “The thinking behind the tax is that it would raise hundreds of millions of dollars while at the same time curbing health-care spending by leading insurers or employers to stop offering the costliest plans to avoid the tax, or passing the tax on to employees in the form of higher premiums, which might lead employees to seek cheaper plans.” (Chairman’s Mark, “America’s Healthy Future Act Of 2009,” Introduced 9/16/09; Alec MacGillis, “Ahead Of Obama’s AFL-CIO Appearance, Labor Officials Express Concern Over Excise Tax,” The Washington Post’s “Daily Dose” Blog, 9/15/09)

Sen. Jay Rockefeller (D-WV) Rips This As “Big, Big Tax” Hitting Many Americans. “He should understand that (his proposal) means that virtually every single coal miner is going to have a big, big tax put on them because the tax will be put on the company and the company will immediately pass it down and lower benefits because they are self insured, most of them, because they are larger. They will pass it down, lower benefits, and probably this will mean higher premiums for coal miners who are getting very good health care benefits for a very good reason. That is, like steelworkers and others, they are doing about the most dangerous job that can be done in America.’” (Teddy Davis, “Dem Senator Warns Of ‘Big, Big Tax’ On Middle Class In Baucus Bill,” ABC News’s “The Note” Blog, 9/16/09)

#2: THE OBAMA-REID MEDICAL INNOVATION TAX

Senate Dems’ Bill Has New Taxes On Medical Devices, Raising Costs For Health Care Services. “The medical-device industry is organizing companies that make everything from CT scans to contact lenses to fight a proposed $4 billion annual fee on device makers, arguing that companies across the board could get hit with the fees. And the industry is trying to rally companies that make even mundane items like condoms and Q-tips to fight the fee, as well. ... ‘They’re going to get walloped upside the head with a new tax during a struggling economy,’ he [AdvaMed chief lobbyist Brett Loper] said. ‘Hopefully, we can convince enough people that a medical products tax will only increase the costs.’” (Chris Frates and Carrie Budoff Brown, “Medical-Device Makers Launch Blitz,” Politico, 9/14/09)

Dem Senators Oppose This Tax Because It Will Reduce Medical Innovation. “The four senators from Minnesota and Indiana on Tuesday called on Senate Finance Committee Chairman Max Baucus to remove the $4 billion annual fee on device companies he proposed to help pay for reform. ‘At a time when every effort is being made to promote small business and growth industries of the future, the proposed medical device tax would harm economic development and health care innovation nationally and in our states,’ Sens. Amy Klobuchar (D-Minn.), Evan Bayh (D-Ind.), Dick Lugar (R-Ind.) and Al Franken (D-Minn.) wrote in a letter to Baucus on Tuesday.” (Chris Frates, “Minn. And Indy Senators Call On Baucus To Remove $4 Billion Annual Fee On Device Companies,” Politico’s “Live Pulse” Blog, 9/15/09)

#3: THE OBAMA-PELOSI SMALL BUSINESSES SUCCESS TAX

House Dems’ Bill Has $550 Billon Income Tax Hike On Many Small Businesses. “Beginning in 2011, the plan would target all income over $350,000 a year for families and $280,000 a year for individuals ... The surtax would start at 1 percent, rise to around 1.5 percent for families earning more than $500,000, then step up again, to around 3 percent, for families earning more than $1 million ... That would raise about $550 billion over the next decade ...” “This [surtax] would hit job creators especially hard because more than six of every 10 who earn that much are small business owners, operators or investors, according to a 2007 Treasury study... America’s successful small businesses would pay higher tax rates than the Fortune 500, and for that matter than most companies around the world ...” (Lori Montgomery, “Democrats Agree On Tax Hike To Fund Health Care,” The Washington Post, 7/13/09; Editorial, “The Small Business Surtax,” The Wall Street Journal, 7/14/09)

That Could Lead To Over 450,000 Jobs Lost Over Next 10 Years. “Job losses would mount over time as potential high-income earners forgo job-creating endeavors; By 2019, the economy would offer 452,000 fewer jobs than it would have without the reforms; Self-employed individuals as a group would have $16 billion less income in 2019 (nominal dollars); The surtax would impose a deadweight cost of $12.8 billion in lost gross domestic product (GDP) in 2011, rising to $68.2 billion by 2019 and costing taxpayers an average of $46.7 billion per year; A typical family of four would have $995 less in disposable income in 2019 -- enough to pay for routine annual checkups for the four individuals.” (Karen Campbell Ph.D., “Current Health Insurance Reform Proposals Vs. Real Reform And Economic Growth,” Heritage Foundation Backgrounder #2321, 9/23/09)

#4: THE OBAMA-REID MIDDLE-CLASS TAX

Senate Dems’ “Individual Mandate” A Tax On Middle-Class Families Who Can’t Afford Insurance. Joint Committee On Taxation Chief Of Staff Thomas Barthold: “Senator Grassley, the penalty proposed in the Chairman’s mark, is as you observed, it’s structured as a penalty excise tax, we have other penalty excise taxes in the internal revenue code ... We have not done a combined distribution analyses across income to specifically answer your question but to the extent that yes we think that some people would be subject to the penalty excise tax when everything shakes out we would expect that some would have incomes less than $200,000 dollars.” (George Stephanopoulos, “Mandate Or Tax? Grassley V. Baucus,” ABC News’s “George’s Bottom Line” Blog, 9/22/09)

House Dems’ Bill Also Has “Individual Mandate” Which Imposes 2.5 Percent Income Tax On Uninsured Individuals. “The penalty assessed on people who would be subject to the mandate but did not obtain insurance would equal 2.5 percent of the difference between their adjusted gross income (modified to include tax-exempt interest and certain other sources of income) and the tax filing threshold ...” (Douglas W. Elmendorf, “Preliminary Analysis Of The Insurance Coverage Specifications Provided By The House Tri-Committee Group,” Letter To Chairman Rangel, 7/17/09)

No Wonder Obama Attacked Hillary Clinton Over This Tax During Campaign. “Senator Clinton believes the only way to achieve universal health care is to force everybody to purchase it … and my belief is the reason that people don’t have it is not because they don’t want it, but because they can’t afford it.” (Michael Luo, “Check Point,” The New York Times, 2/22/08)

#5: THE OBAMA-PELOSI JOB TAX

House Dems’ Bill Makes Employers Who Can’t Afford Health Insurance For Their Employees Pay Tax Equal To 8 Percent Of Their Payroll. “America’s Affordable Health Choices Act will continue the principle of shared responsibility. … Require that larger employers, however, must comply with the ‘Pay-or-Play’ requirements (that is, they must offer insurance to their employees or pay a payroll tax of 8 percent).” (House Committees On Ways And Means, Energy And Commerce, And Education And Labor, “Employers And Health Reform,” Fact Sheet, 7/14/09)

Senate Dems’ Proposal Also Includes Large Tax On These Businesses, Making It More Difficult For Employers To Hire Workers They Need. “[E]mployers who do not offer ‘affordable’ coverage to employees would have to help pay the cost of such benefits for their low-income workers ... The Center on Budget and Policy Priorities, a liberal research and advocacy group, said this proposal ‘could unintentionally discourage the hiring of lower-income people,’ by adding a new ‘health surcharge’ to the cost of employing them.” (Chairman’s Mark, “America’s Healthy Future Act Of 2009,” Introduced 9/16/09; Jeff Zeleny and Robert Pear, “Obama Says Government Health Coverage Plan Would Not Hurt Private Insurers,” The New York Times, 6/23/09)

#6: THE OBAMA-REID STATE TAX

Senate Dems’ $900 Billion Bill Would Force States To Pick Up New Costs Of Government-Run Health Care. “Members of the Senate Finance Committee said they might require states to pay a larger share, perhaps 15 percent or 20 percent of the new costs. Governors of both parties object to such requirements as an ‘unfunded mandate.’” (Sen. Max Baucus, “Baucus Introduces Landmark Plan To Lower Health Care Costs, Provide Quality, Affordable Coverage,” Press Release, 9/16/09; Robert Pear and David M. Herszenhorn, “New Objections To Baucus Health Care Proposal,” The New York Times, 9/14/09)

And Governors Expressing “Bipartisan Animosity” Over Costs Being Dumped On Their States Because It Could Force Them To Raise Taxes. “The nation’s governors, Democrats as well as Republicans, voiced deep concern Sunday about the shape of the health care plan emerging from Congress, fearing that Washington was about to hand them expensive new Medicaid obligations without money to pay for them. The role of the states in a restructured health care system dominated the summer meeting of the National Governors Association here this weekend -- with bipartisan animosity voiced against the plan ... Although many governors said significant change in how the nation handles health care was needed, they said their deep-seated fiscal troubles made it a terrible time to shift costs to the states. With the recession draining states of tax revenues even as their Medicaid rolls are surging, the National Governors Association projects that states will face aggregate deficits of $200 billion over the next three years.” (Kevin Sack And Robert Pear, “Governors Fear Medicaid Costs In Health Plan,” The New York Times, 7/20/09)

#7: THE OBAMA-REID DOCTOR TAX

Senate Dems’ Bill Requires Physicians To Pay Tax Of Up To $350 In Order To Treat Medicare Patients. “The Chairman’s Mark would require that the Secretary screen all providers and suppliers before granting Medicare billing privileges … An application fee of $350 would be imposed on providers and suppliers to cover the costs of screening. Current providers could be subject to a discounted screening fee of $250 if they pay it within 12 months of enactment.” (Chairman’s Mark, “America’s Healthy Future Act Of 2009,” Introduced 9/16/09)

#8: THE OBAMA CHARITY TAX

Obama Proposed Limiting Income Tax Deductions To Help Pay For His Health Care Experiment, But Dem Leaders Say It Would Hurt Charities And Other Non-Profit Organizations. “Limit income-tax deductions for high earners: This is Mr. Obama’s main idea for raising revenue… Democratic leaders immediately objected that that would hurt charities, universities and other entities dependent on tax-deductible donations, as well as taxpayers in high-tax cities and states, including New York City and other places home to Democratic leaders.” (Jackie Calmes, “Obama And Congress Clash On How To Pay For Health Care,” The New York Times, 6/26/09)