Last Wednesday, the Senate Majority Leader Harry Reid and key Democratic leaders announced their highly anticipated health care reform bill, which has already been voted to the debate floor. For those of you who do not remember, the House of Representatives unveiled their plan a few weeks ago. The Senate's bill is supposedly the result of a handful of different bills, and has been named the “Patient Protection and Affordable Care Act” (PPACA). Similarly to the House’s bill the Senate’s act seeks to increase taxes to provide coverage to millions of Americans that are currently without health insurance.
The Basics of the Bill
According to estimates the PPACA is expected to cost $848 billion, and will include a public option that has an opt-out clause for individual states. There will be a federal mandate to purchase insurance, as well as fines for businesses that do not offer insurance. It is expected to provide coverage to over 30 million Americans, but will include a ban preventing illegal immigrants from taking advantage of the program.
Housing Credits for Veterans?
Technically, the PPACA has been presented as an amendment to a House of Representatives bill about housing credits for Veterans. This is a pretty controversial move, and a very strategic way to handle the issue. When debating and voting on a massive health care overhaul, Senators will also be forced to decide the fate of housing benefits for veterans – which is a very sensitive issue for many.
Fixing the Budget
It has been suggested that over the next 10 years, the PPACA will actually reduce the federal budget deficit by an estimated $130 billion. This is because the cost of the bill would be more than offset by tax increases, fees, and a reduction in the growth of Medicare. Additionally, the tax increases will take effect immediately, while the benefits will not begin until 2014.
The "Cadillac" Penalty
One of the ways the reform will be funded is through a new excise tax on high valued, “Cadillac” health insurance plans. If passed into law, a 40% tax would be levied on health coverage in excess of $8,500 for individuals $23,000 for families.
Half Percent Tax for High Earners
Unlike the House’s 1% tax increase, the PPACA will only increase taxes on high earning Americans by 1/2%. According to the bill, Medicare payroll taxes would be increased from 1.45% to 1.95% for individual taxpayers making over $200,000 or families making $250,000 per year.
Fines on Businesses
Any business employing more than 50 employees will be subject to serious fines if they do not provide insurance coverage. They will be forced to pay the Federal government $750 per year per employee that is not insured. However, since the taxes and fines are intended to take effect immediately many experts are worried that these fees will make the country’s unemployment problem even worse.
Cosmetic Surgery TaxLookout Hollywood, the health care reform bill also includes a 5% tax on elective cosmetic surgeries. This may not seem like that big of a deal to most of us, however it opens a dangerous door by allowing the government to tax a procedure directly.