Differences in Cost of Two Health Care Reform Plans
Speaker of the House Nancy Pelosi and her senior legislators unveiled the House’s H.R. 3962 health care reform bill Thursday morning, according to this CNSNews.com report, which notes the bill “would impose an array of new taxes, fees and government mandates on major players in the health industry, including insurers, doctors and drugs and medical devices makers.”
The Tax Foundation reports the Congressional Budget Office (CBO) has scored the 10-year cost of H.R. 3962 at $1.05 trillion. By comparison, CBO costed Senator Max Baucus’s (D-Montana) proposal at $829 billion. (Tax Foundation’s news release and Fiscal Fact No. 200) Both plans are financed with cuts to Medicare, and both have one large new tax. However the two taxes are very different. The Tax Foundation explains the basic differences and similarities of the two bills this way:
“ . . . Both bills would impose a financial penalty on individuals if they do not buy health insurance, although the House penalty is higher. In both plans, employers would have to pay a penalty to either the government or to new "health exchanges" if they do not provide a government-approved health insurance plan to employees, and once again, the penalty is larger in the House bill.“Also, both health care plans are financed by large net cuts to the Medicare program, mostly by lowering what the federal government is willing to pay doctors, hospitals and other health providers. Economists expect such Medicare cuts to be felt by both the health care industry and patients covered by Medicare.
“Each plan has one large new tax, but those are quite different. Sen. Baucus's bill raises substantial revenue with a 40-percent excise tax on the value of so-called Cadillac health insurance plans. Democrats in the House shun the "Cadillac tax," agreeing with labor unions who have often bargained for the most expensive health insurance coverage. Instead, they propose a surtax on high-income tax returns. Single filers earning over $500,000 in adjusted gross income (AGI) and couples earning over $1 million would pay 5.4 percent of any additional dollar of income. That surtax would be on top of the scheduled tax rate hike on the ordinary income of high-income taxpayers that is set to take effect in 2011 (top rate moves from 35 percent to 39.6 per”
One item of interest is that total deficit reduction of the Pelosi bill is listed at $104 billion while total deficit reduction of the Baucus bill is $81 billion. After the costs skyrocket, there won't be any need to worry about deficit reduction. With the House and Senate working feverishly to get a bill to the President, stop by frequently for updates.