Sunday, April 11, 2010

Well, Here's Another Nice Mess You've Gotten Me Into

It's hard to believe that a health care bill so mild and moderate and, yes, capitalistic, that it took its inspiration from the conservative Heritage Foundation and its blueprint from Governor Romney's Massachusetts, could have proven so unpopular with the American people.

But as Firedoglake's Jon Walker has noted, the Democratic Party lost the messaging battle on health care. When early CBO scores estimated that reform would increase the budget deficit, Rush Limbaugh and Glenn Beck (and probably other right-wing talk show hosts), as well as their callers, trumpeted CBO scores. Individuals (such as Dick Cheney) who disregarded deficits as long as they were produced by tax breaks for the wealthy became born-again deficit hawks. And so, Walker reminds us, Senate Democrats "probably wasted well over two months just waiting for CBO scores and making small changes so the bill was found to be deficit reducing."

Ultimately, CBO scores turned positive, suggesting that the legislation passed by Congress would not explode the deficit, but rather cut it significantly over the next two decades. Though the deficit-reducing impact of reform was not acknowledged by the right, continuing criticism of the bill(s) was complicated by the CBO scores. As the (not Crimson) tide turned, the conservative critique shifted from a (disingenuous) concern about deficits to outrage over "tax increases"- shown here in quotes because, conservatism often being a fact-free zone, little detail generally was provided.

As the House was on the verge of passing the industry-friendly, free enterprise-preserving Senate bill, the Christian Science Monitor summarized the tax increases included in the bill. The writer breaks it down into five areas, here reprised in order of greatest revenue producer to the least: higher medicare taxes on rich people, fees on health care industries, new tax on expensive health insurance, medicare cuts, and a tanning tax:

- As of January 2013, for individuals earning over $200,000, or couples earning over $250,000 yearly, "Medicare Part A (that’s hospital insurance) tax rate would be increased by 0.9 percent, to 2.35 percent. Second, the bill creates an entirely new tax of 3.8 percent on unearned income (dividends, interest, stuff like that) for people in those same income brackets."

- As a result of deals (which probably will cost consumers more than they will save taxpayers) made with different sectors of the health care industry, "Drug manufacturers would pay the US a total of $16 billion between 2011 and 2019. Health insurers would pay $47 billion over the same period. Medical device manufacturers would pay a 2.9 percent excise tax on the sale of any of their wares, beginning Jan. 1, 2013."

- Dubbed the "Cadillac tax" (but these days, probably more appropriately the "Lexus tax"), beginning in 2018 there will be "an excise tax on insurers of employer-sponsored health plans that cost more than $10,200 annually for individual coverage, or $27,500 annually for family coverage. The tax in question would be 40 percent of the cost of the plan that exceeds those dollar thresholds."

- Cuts to Medicare, which Republicans trumpet and President Obama denies, will consist of relatively small custs to certain hospitals, somewhat larger cuts to home health care, and much greater cuts "to Medicare Advantage – plans run by private insurers that are an alternative to traditional Medicare – (which) would be reduced by $132 billion over 10 years under the health care reform bill. (Those plans now get around 14 percent more per person than traditional Medicare does.)"

- There will be a 10% tax on indoor tanning services.

The Democratic Party, led by President Obama and Vice President Emanuel, made reduction of deficits a fetish and increased various taxes. But voters, aghast at tax increases which they believe (in most cases, falsely) will apply to them, hold "Obamacare" responsible. And, as an added political bonus for the GOP, they still believe that reform will increase the deficit.

This was a fine case of political bungling. The tax on strong health care plans, for instance, has weakened President Obama's standing with the base, while the GOP, which has little problem with weakening health care plans, has given him no cover. This could be considered a metaphor for the entire effort, which produced a Republican-lite health care bill with no votes and considerable condemnation from the GOP. Unfortunately, Democratic members of Congress up for (re-)election this November will have to deal with the political fallout.

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