Thursday, October 08, 2009

Health care "reform" will help the poor-maybe not

The blog "Diagnosis", which is one of three blogs connected the New Atlantis.com, offers a detailed analysis of the effect of a proposed health care bill ( the Baucus bill) on the level of poor people just above the lowest level. The author is James C. Capretta. See here for that commentary.

As Capretta explains as a family moves from the lowest category to the next ( slight higher) run of the economic income ladder they loose a major portion of the government subsidy which is offered to help pay for the the health insurance the government is forcing them to buy.Here is a quote from that article detailed what is in effect an "implicit marginal tax" of no small proportion:

"According to CBO, family coverage in 2016 is likely to cost about $14,400 under the so-called “silver option” in the health-care reform plan sponsored by Senate Finance Committee Chairman Max Baucus. In the Baucus plan, a family of four at the poverty line (about $24,000 in 2016) would have pay to about $1,400 toward coverage, with the federal government paying the other $13,000 on their behalf. In addition, the government would also provide $3,500 to reduce the family’s deductible and co-payment costs for health services. Thus, the new entitlement provided by the Baucus bill would be worth a whopping $16,500 for a family at the poverty line.

As incomes rise, however, the Baucus bill cuts the value of the entitlement. A family with an income at twice the poverty line, or $48,000 in 2016, would get $9,072 in federal assistance for coverage — still a substantial sum. But it’s $7,400 less than the family would get if they earned half as much. The Baucus plan thus imposes an implicit marginal tax rate of about 30 percent ($7,400/$24,000) on wages earned by families in this income range."

Of course,no one knows what the final bill will contain but the possibility of grotesque unintended consequences such as the one suggested by Mr. Capetta is a strong reason for there to be adequate time for all sides to know exactly what will be voted on and not have some massive hodgepodge of provisions rushed through Congress. The recent proposal to have whatever the bill turns out to be posted for 72 hours on the web is a step in the right direction but so far democratic party leadership is less than enthusiastic so passage is more than a bit problematic.

1 comment:

Lisa said...

I hope this bill does some good.