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Ron Radosh

Health Care and the Fall of Obama

January 15th, 2010 - 1:21 pm

If  you want to know why President Obama’s poll ratings are slipping daily, and why  in Massachusetts the unthinkable may actually occur- a win for Republican Senate hopeful Scott Brown over Democrat Martha Coakley in the forthcoming Special Election- look no further than the new deals being made in an effort to pass health care legislation.

As a New York Times blog explains today, “the White House and Congressional leaders struck a tentative deal with organized labor groups on a proposal to tax high-cost, employer-sponsored insurance policies as one way to pay for the legislation. The bill the Senate passed included a version of this excise tax that the Congressional Budget Office said would generate $149 billion over 10 years toward the cost of the legislation. But after making changes to mollify organized labor groups and reduce the number of union-sponsored insurance plans that will be hit by the excise tax, the version of the tax to be included in the final bill will probably generate only $90 billion, officials said.”

To get through the double-talk, what the compromises with special interests means, as the news report makes clear, is  “an approximately $50-billion hole…[in the deficit that] is expected to grow even bigger as top White House officials and Congressional leaders work through other issues that will raise the cost of the legislation.”

As another Times report explained, “under the bill passed last month by the Senate, the federal government would have imposed a 40 percent tax on the value of employer-sponsored health coverage exceeding $8,500 a year for an individual and $23,000 for a family. The tax would have taken effect in 2013. White House officials, Democratic Congressional leaders and labor unions said Thursday that they had agreed to an increase in those thresholds to $8,900 for an individual and $24,000 for a family. Moreover, they said, starting in 2015, the cost of separate coverage for dental and vision care would be excluded from the calculations. In addition, they said, health plans covering state and local government employees and collectively bargained health plans would be exempt from the tax until 2018.”

Then there is the Medicare problem, and the plan to increase the Medicare payroll tax.   The Times explains: “One criticism is that the approach would undermine one of the core original concepts of Medicare, which is that it serves a social insurance compact between generations of Americans, with the working population contributing premiums (the payroll tax) that pay benefits after retirement. By this argument, as a smaller number of wealthy Americans pay a larger share of the future benefits of Medicare for everyone, the program looks more like traditional welfare than a prepaid retirement benefit.”

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