Among the Many Things Wrong with the Senate Health Care Bill

By November 23, 2009Health Care, Taxation

The Payroll Tax Increase — From e21,* “The Payroll Tax Increase: A Loophole and Ticking Time Bomb“:

After Saturday’s procedural vote in the Senate, health care legislation will finally move forward to a full floor debate and transparent amendment process.  With that in mind, it is important to analyze some of the most troubling aspects of the Senate health care legislation, particularly the increase in the payroll tax that many are calling the “Medicare AMT (Alternative Minimum Tax).”  Putting aside for a moment the other problems with increasing the payroll tax, the current proposal is not indexed for inflation.  This means it will hit an increasing number of middle class families each year, just like the Alternative Minimum Tax does today.

The End of HSAs — From The Wall Street Journal, “The End of HSAs“:

The Reid bill also assaults health savings accounts, or HSAs, which allow individuals to accumulate tax-free funds for future medical expenses when coupled with low-premium, high-deductible insurance. The Reid bill changes tax provisions to make HSAs less attractive, but the real threat comes via increased regulation.

These insurance products will likely be barred from the insurance “exchanges” that will demolish and supplant today’s individual market. Employers will also find them more difficult if not illegal to offer once the government has new powers to “define the essential health benefits” that all plans must eventually offer. Plans that focus mainly on catastrophic health expenses, instead of routine procedures, aren’t generous enough for Democrats.

 The Public Option — From Portfolio, “Public Option Still Divides“:

Even though it was stripped from a Senate committee bill to get it passed and even though some Democrats say they will vote to kill a bill with a public option, the new plan is present in both the Senate and House versions of President Obama’s health reform….[snip]

Business groups oppose the public option largely because they see it as a potential cost shift to private industry. Another government plan that won’t reimburse doctors and hospitals fully will mean private employers pay more to insure their workers.

“This will lead to a cost shift, which will mean manufacturers who continue to offer private insurance will face higher premiums,” National Association of Manufacturers President John Engler says in a statement.

*e21 describes itself as “a new nonprofit, nonpartisan organization dedicated to economic research and innovative public policies for the 21st century.” Hat tip: Yuval Levin, who recommends the site highly.

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