Monday, November 2, 2009

Healthcare reform is doomed

The Tax Foundation has analyzed the Pelosi and Baucus healthcare reform proposals, and finds that they are going to be financed by huge cuts in Medicare and huge taxes on individuals. This is getting to be so ugly that I can't imagine either bill will survive. Thank goodness! Pelosi is going to make healthcare affordable for those who don't currently have it by slashing spending on Medicare for those that do have it? Baucus is going to make healthcare more affordable by imposing a huge tax on those who already have it? Ain't gonna happen. In the interest of public service, I reproduce the essentials:

The $1.05 trillion House health care reform legislation unveiled by Speaker Nancy Pelosi yesterday is financed primarily through net cuts to Medicare (which would save $472.8 billion, or 39 percent of the bill's 10-year cost), and a 5.4 percent surtax on high-income individuals (which would generate $460.5 billion, or 38 percent of the bill's cost), according to the Tax Foundation's review of the Congressional Budget Office's (CBO) analysis.

By comparison, nearly half of the $829 billion Senate Finance Committee plan is financed through Medicare cuts ($377.8 billion, or 41 percent of the bill's 10-year cost), and 22 percent would come from an excise tax on so-called "Cadillac" health insurance plans, which would raise an estimated $201.4 billion over 10 years. The House plan would reduce the deficit by $104 billion and the Senate version by $81 billion.

"There are similarities and major differences between the House and Senate plans: Both rely on Medicare spending cuts, although the House plan would cut nearly $100 billion more, and both plans include one large new tax - a high-income surtax in the House version and a tax on high-value health insurance plans in the Senate version," said Tax Foundation Senior Economist Gerald Prante.
Here are the charts that summarize the financing sources for the two bills:


W.E. Heasley, CLU, LUTCF said...

Mr. Grannis:

Agree with you that the plans would never survive based on Economic arguments. That the plans would never survive on Political-Economy arguments.

Enter Ideology. Enter egos. Enter Thug-o-nomics. That changes the picture.

Possibly the link below gives you some additional information on the debate:

Scott Grannis said...

I think we are all saying that healthcare reform has gotten so distorted by ideology, big government and higher taxes that it doesn't stand a chance of passing.

Public Library said...

For someone who is so optimistic, you seem awfully gloomy towards the people who are hopeful about passing health-care reform?

Scott Grannis said...

I am actually very encouraged to see healthcare reform get bogged down. "What's bad for Obama is good for markets" has been a long-running theme of mine.

Louis Cyphre said...

I really hope you are 100% spot-on in your prediction. I have some reservations. In many ways progressivism is a religious movement. And everybody keeps saying that faith can move mountains.

Scott Grannis said...

Louis: I have a good feeling about this, and I feel much better given the results of yesterday's elections. I have believed all year long that the people were not ready for a huge lurch to the left, and I think we are now seeing some serious pushback to the Democrat's plans to take over yet another industry.