Health Care Update: Blue Dogs to Roll Over Again in House? : Senate Cmte passes bill on party lines…

Update 3: Ed at HA is covering the details on how this will hit our pocketbooks and the economy at large…

Update 2: Apparently the Propagandist in Chief is taking to all our airwaves yet AGAIN to do the hard sell, see MM for details….

…Noel Sheppard reports: “All Three Nets To Interview Obama About Healthcare Wednesday.”…

Update: FOX interviewing Blue Dog Rep Jim Matheson D-UT he says he cannot support the bill as it is written now…

CALL YOUR CRITTERS!!

Bills are now out of House and Senate Cmtes. They are pushing this through before the August economic forecasts need to be revised by the WH…Once that revision comes it will be CLEAR we cannot afford this…

In the House Bill there is an 8% payroll penalty for small businesses that do not offer insurance, there is a 2.5% penalty on individuals, and of course there are also MASSIVE SERVICE AND PAYMENT CUTS to Medicare as well as surcharge taxes on income for individuals and small businesses (WSJ)…

This is everything TOTUS whined at Hill about during our primaries, the individual mandate and the penalties, yet he is endorsing the House bill…this is 16% of our GDP folks…

Here is one (or two!!!) for my party which is OFF THE RAILS…God Save the Middle Class and Small Business…

Great analysis from Keith Hennessey:

…As expected, the House bill would mandate that individuals and families have or buy health insurance.But what if they don’t buy it?

Then Section 401 kicks in.  Any individual (or family) that does not have health insurance would have to pay a new tax, roughly equal to the smaller of 2.5% of your income or the cost of a health insurance plan.

[ Technical note:  From the legislative language, it appears the tax = min( 2.5% * (modified AGI – personal exemption), average premium cost).  In the examples below, for simplicity I assume modified AGI = AGI.]

I assume the bill authors would respond, “But why wouldn’t you want insurance?  After all, we’re subsidizing it for everyone up to 400% of the poverty line.”

That is true.  But if you’re a single person with income of $44,000 or higher, then you’re above 400% of the poverty line.  You would not be subsidized, but would face the punitive tax if you didn’t get health insurance.  This bill leaves an important gap between the subsidies and the cost of health insurance.  CBO says that for about eight million people, that gap is too big to close, and they would get stuck paying higher taxes and still without health insurance.


Example 1:Bob is single and earns $50K per year.  He earns more than four times the federal poverty level, so he does not qualify for subsidies under the House bill.

Bob works for a five-person small business that does not provide him with health insurance.  His $50K wage is average for this company, which therefore does not qualify for the new small business tax credits.

This company is small enough that they do not have to pay the IRS any fee for not providing Bob with health insurance.  (See the table on page 184.)

With only $50K of income, Bob cannot afford to buy health insurance.  Under the House bill, he would then have to pay about $1,150 per year in higher taxes to the government.  That’s 2.5% of (his income minus a $3,650 personal exemption).

I went shopping for Bob on eHealthInsurance.com.  He is 50 years old and a non-smoker, living where I do in Virginia.  The cheapest bare bones policy he can get is $1,620 per year.  Most plans are in the $3K – $5K range.  That $470 difference between the tax and the cheapest premium is more than Bob can afford on a $50K pre-tax annual wage.

To summarize, under the House bill:

  • Bob is a single 50-year old non-smoking small business employee who makes $50K per year before taxes and does not have health insurance.
  • Bob cannot afford a $1,600 bare bones health insurance policy, much less a $3K — $5K policy.
  • Bob would get no subsidies under this bill, and his employer would face no penalty for not providing him with health insurance.
  • Bob would end up without health insurance and would have to pay $1,150 more in taxes. (more…)
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July 15, 2009. Tags: , , , , , , , , , , . Economy, Finance, Labor Department, Music, Obama Administration, Politics, Taxes, Unemployment Statistics, Wall St. Comments off.

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