Robert Reich: Will Health Care Reform Be Paid For By The Rich or the Middle Class?

[Better Believe It]

The Last Big Question: Will Health Care Reform Be Paid For By The Rich or the Middle Class?
By Robert Reich
January 11, 2010

There’s only one big remaining issue on health care reform: how to pay for it. The House wants a 5.4 percent surtax on couples earning at least $1 million in annual income. The Senate wants a 40 percent excise tax on employer-provided “Cadillac plans.” The Senate will win on this unless the public discovers that a large portion of the so-called Cadillacs are really middle-class Chevys, expensive not because they deliver more benefits but because they have higher costs.

Defenders of the Senate plan say not to worry. Employers who bear the tax and therefore have an incentive to cut back on health care for their employees will make it up to employees in higher wages. But anyone taking even a passing glance at today’s labor market knows this is wishful thinking. Employers have no incentive to raise wages when almost everyone is worried about keeping their jobs. (Besides, a dollar’s worth of tax-free health benefit is worth more than a taxable dollar of wages.)

In any event, I thought a major purpose of health-care reform was to get more care to more people, not to cut it back. Even employees who get extra dollars of wages to make up for the cutbacks won’t necessarily plow those wages back into health care.

Some say the Senate’s excise tax is the only way to control long-term health care costs. Baloney. If a portion of the middle class loses their health care, they won’t get the preventive care that’s so crucial to containing long-term costs. If Congress wanted to do more cost containment it would allow Medicare and Medicaid to use their huge bargaining power to get lower costs from pharmaceutical makers and medical suppliers. And it would have a public option to compete with private insurers.

Of course, we’re playing with probabilities here. No one knows exactly what will happen when the Senate excise tax hits — how many employers will cut back coverage without raising wages to compensate, how many middle class people will be hit hard by this, how many who do get higher wages will use them to buy health care, including preventive care.

But why even take these chances when the House bill simply and cleanly goes after the top 1 percent? It’s not as if couples earning over a million can’t afford to pay the tax. When I last looked, the top 1 percent was taking home a record 23 percent of total income. If anything, the Great Recession is widening the gap. It’s bonus time on Wall Street again. But the middle class is taking a beating.

Read the full article at:

http://robertreich.org/post/328990297/the-last-big-question-will-health-care-reform-be-paid

[BP2]

1. Sadly, as it stands today, it seems like everyone's a loser with Senate plan.

[Selatius]

2. With the Senate the way it is, LBJ couldn't get Medicare passed if he had to do it again.

This time around, there are too many right wing Democrats jamming up things.

[Better Believe It]

3. LBJ only needed 51 votes. And so does Obama if he wanted to force Republicans to filibuster

[Selatius]

6. Republicans and Democrats were a different kind back then, though.

These Republicans will filibuster everything to the left of center-right. The Republicans of the 1960s were of more moderate views. Today, they'd be considered Democrats, and that's the rub. Democrats of the 1960s leaned further left on economic issues than they do today because voters still remember their working-class hero FDR, and LBJ also wanted to carry that mantle despite Viet Nam destroying so many working class lives. Today, a good number of Democrats would be considered Republicans by 1960s standards if we examined their economic positions, especially since many have embraced neoliberalism as an economic policy.

[Better Believe It]

17. The Republicans have filibustered nothing. Republicans are permitted by Senator Reid to simply

file a mere statement indicating they are engaged in a filibuster!

And during these fake "filibusters" the Senate, under the two track agreement with Republicans, can take up other Senate business!

Senate Democrats have the power to force Republicans to engage in real Senate floor filibusters and they have the power to immediately stop a real Republican filibuster by using the "constitutional option".

[Skidmore]

4. To me, it seems that the middle class and the rich expect the poor and working poor

to pay for everything.

[stray cat]

13. The poor and working poor are the ones who benefit this time around

I think you have it wrong this time unless like McCain you consider middle class over 5 million per year

[Hello_Kitty]

14. So you stand with the rich against the middle class then.

Because when you start lumping the middle class in with the rich as you just did, that's what you are doing. Screwing the middle class over only makes life harder for the poor.

[Skidmore]

16. Did I say that?

It seems that no one wants to step up.

[laughingliberal]

19. The middle class (what's left of it) are getting hit by this tax and have been hit for 30 years

...which is why there's not much middle class left. The rich have gotten a free ride for 30 years and they need a tax increase in the worst way.

[laughingliberal]

5. He's absolutely correct. There might be a short term savings in this approach

as employers scale back coverage and people seek less care but the long term means easily treated problems become more serious and more expensive.

Allowing Medicare and Medicaid to use their buying power to negotiate better drug prices would have been a huge savings but, instead, we decided to protect pharmaceutical profits. Other ways to save these 2 programs money would have been to put more money into the areas which have been shown to save money like home health and hospice. Home health has been targeted since the Clinton years when he decided we could save tons routing our 'waste, fraud, and abuse.' Problem is most of the waste, fraud, and abuse was in the hospitals but they went after it in home health care. The savings were minimal but the reduction in compensation to the industry did result in running many agencies out of business. The hospitals made out like bandits. Not only did they not take any hits to reimbursements they got more admissions cause there were fewer home health agencies monitoring patients and able to catch problems before hospitalization was necessary. There are ways to save a lot of money in these programs but we didn't choose to use them.

[dkf]

7. This is a backdoor tax on the middle class.

It's the senators payoff to the big contributors.

[laughingliberal]

18. I hope they are backing off it, somewhat. I don't see it going away but it may be 'tweaked.'

Reports last night were that there was one suggestion to exempt benefits which had been won through collective bargaining. The unions turned down that approach saying they wanted all middle class workers protected from a tax increase, not just their members (kind of knocks down the union bashing message that they were just out for themselves, huh?). So, it appears what we may get is a revision of the definition of high end plans, likely a raise in the price of a premium which would qualify. At any rate, the report I saw said that the President had given the concerned parties 48 hours to get back to him with ideas. Am anxious to see what comes out of this.

Would be a good idea to call the White House and any Democratic representatives you have and let them know you do not support this tax. Another thing you might mention is the wellness programs which will wind up costing people with preexisting conditions and health concerns a lot of money and lead to quite an invasion of their privacy. It is a Republican amendment put in by one of my Senators, John Ensign. I think they are not hearing much about this because few people are aware of it. It needs to be on the radar screen and we need to let them know we don't want it in there.

[xchrom]

8. In this economy employers have no incentive

To raise wages-- ain't that the truth.

[begin_within]

9. Make the health insurance companies pay for it.

[Raster]

10. Absolutely! They are the ones profiting. They contribute NOTHING to national health care,

EXCEPT profit from it.

[begin_within]

11. It could be argued that the insurance companies harm the health of Americans,

since all they do is skim profit from the pool of money they are reducing the money available for patient care and thus reducing the quality of care, thus harming the health of their own customers.

[stray cat]

12. Why not from all of us?

[laughingliberal]

20. I would support a progressive income tax to pay for it if they did any real cost control measures

and regulated the industry to keep premiums down. I wouldn't support it for this bill because that will become a never ending tax increase to keep up with the premiums and rising costs.

[CrispyQ]

15. What fucking planet do these assholes live on?

"Defenders of the Senate plan say not to worry. Employers who bear the tax and therefore have an incentive to cut back on health care for their employees will make it up to employees in higher wages."

:banghead: :banghead: :banghead:

:grr:

[laughingliberal]

21. I think they live on a planet where they never had to work as a peon for one of these corporations

..they seem to think are so generous with us.

[slipslidingaway]

22. knr - especially this part ...

"...Some say the Senate’s excise tax is the only way to control long-term health care costs. Baloney. If a portion of the middle class loses their health care, they won’t get the preventive care that’s so crucial to containing long-term costs. If Congress wanted to do more cost containment it would allow Medicare and Medicaid to use their huge bargaining power to get lower costs from pharmaceutical makers and medical suppliers. And it would have a public option to compete with private insurers...

...This is the last big fight on health care reform. It’s being fought right now. Make your voice heard."