Democrat Health “Reform” Picks Winners and Losers
While Democrats allege that their government takeover of health care will create a fairer and more equal society, provisions in Speaker Pelosi’s government takeover of health care (H.R. 3962) and Sen. Reid’s version (H.R. 3590) provide perverse incentives that will only increase inequity among Americans:
The Many Pay for the Few: Over and above significant concern that enacting their legislation will exacerbate out-of-control federal spending, many may question the entire premise of Democrats’ government takeover of health care. According to the CBO score of the Pelosi bill, in 2019, the federal government will spend $207 billion—approximately $612 for each of the country’s projected 338 million residents—in order to only partially subsidize health coverage for 30 million (15 million through Medicaid, and the same amount through subsidies in the Exchange). Many may question such a strategy for both its added burden on the federal government’s already looming fiscal crisis—and its effectiveness in following President Obama’s stated goal for the federal government to “spread the wealth around.”
People with Employer Coverage Pay More: While the Pelosi bill provides affordability credits to subsidize some individuals’ health insurance coverage, “firewall” language included in Section 342(b) of the bill prohibits individuals with an offer of employer-sponsored coverage from obtaining these subsidies unless “the cost of the employee premium…would exceed 12 percent” of income. Thus, while a low-income family of four making $35,000 would receive subsidies capping their premium at about $1,050 if their employer did NOT offer a group policy, the same family would be forced to pay up to $4,200 for an employer policy if offered before it would be considered “unaffordable,” making the family subject for federal subsidies. Many may view this inequity as encouraging employers with large numbers of low-wage workers to drop their current coverage and instead obtain greater subsidies for their employees on federal taxpayers’ dime.
Poor People Denied Choice of Plan: Section 342(a)(1)(C) of the Pelosi bill prohibits individuals eligible for Medicaid—including the 15 million new enrollees projected under the legislation—from receiving affordability credits to purchase a private plan on the Exchange. Under this policy, a family of four with income of $33,000—just below 150 percent of the poverty level in 2009—would be forced on to government-run Medicaid, while a family with just $1,000 more income would receive a choice of plans on the Exchange. Many may question whether and why Democrats believe poor individuals are incapable of choosing the health insurance plan that best meets their needs.
Non-Citizens Granted Choice of Plan Options: While the Pelosi bill maintains the current law provision requiring most legal aliens to wait five years before becoming eligible for Medicaid, Section 342(d) exempts the new affordability credits from the waiting period requirement. Thus, while American citizens eligible for Medicaid will be forced into the government-run program and not permitted a choice of plans on the Exchange, legal aliens will be able to choose their own Exchange plan through affordability credits. Many may question the fairness of a health care plan that provides a better choice of health insurance options to non-citizens (even if legal permanent residents) than to sworn American citizens.
Tax on Savings: Rather than using the traditional measure of adjusted gross income, the Reid bill uses “modified gross income” to calculate eligibility for health insurance subsidies. While contributions to Individual Retirement Accounts (IRAs), Health Savings Accounts (HSAs) and other similar savings vehicles would be exempt from the calculation of adjusted gross income under current law, they will be included in the determination for health insurance subsidies under the Reid bill. At a time when the United States faces both an entitlement crisis and a personal savings deficit, many may question the wisdom of an unprecedented policy that would effectively tax retirement savings by including that money when determining the percentage of income individuals must spend on health care.
Federal Funds Subsidize the Undocumented: The Pelosi bill contains no prohibition on undocumented immigrants purchasing coverage on the Exchange. While a notional prohibition (coupled with a weak enforcement mechanism) may theoretically prevent some undocumented from obtaining taxpayer subsidies to purchase health insurance, many may find these provisions insufficient. Moreover, any outlay by a government-run plan would by definition spend federal funds—so any government-run health plan open to the undocumented would result in federal funds being spent to cover those illegally present.
Given all the inequities present in the Democrat bills, one must ask the true motivation behind their government takeover of health care: To make America a more just and equal society, or to increase dependence on government for special favors and privileges?