The bills entitled H.R. 3590 (Patient
Protection and Affordable Care Act) and H.R. 3962 (Affordable Health Care for
America Act) are the most recent versions of the highly debated movements that
deal with Health Care Reform in the United States. Likewise, President Obama
unveiled his own proposal. Both, pundits and economist, are split on the impact
that health care reform will have on the United States economy. Some say that
the bill will bankrupt the nation and destroy our economy, while others say
that it will pay for itself. What do the actual numbers say? In this paper, I
will focus on the most recent plan, the President’s Plan, and study the plan.
According to the White House’s
webpage for the bill, the President’s plan will not add to the deficit. The
President’s plan includes cost saving measures. The plan is to reduce the
amount of fraud and excess in the Medicare system. The President’s plan also
includes a measure to tax insurers with high-cost plans within the decade. This
means that insurance agencies that charge high premiums will be taxed
accordingly. This encourages insurance agencies to lower their prices, while
also generating revenue that will reduce the deficit. The plan has provisions
for taxing pharmaceutical corporations, closing tax loopholes for corporations,
and increase taxes on “unearned” income (such as royalties and interest) on
individuals who earn more than $200,000 per year (Obama “The President’s
Proposal”).
The President’s plan will also
attempt to close the Medicare “doughnut hole”. This is the dilemma of seniors
being forced to pay out of pocket for expensive prescriptions, due to the fact that
Medicare will not pay for prescription refills after a certain point, and will
only pay for them again after the Medicare patient has already paid a large
amount of money. The President’s plan will raise the “doughnut hole” by $500
and send out $250 rebates to those who do hit the “doughnut hole”. Likewise,
the plan will provide a 50% discount on prescriptions. The President’s Plan
also provides for community health centers, by providing $11 billion dollars in
funding (Obama “The President’s Proposal”).
The President’s Plan will also
grandfather in older plans that individuals chose to keep, but minor changes
will be made on the insurance agencies end. State and HHS will review plans to
make sure that they are affordable. However, if you are uninsured, you will be
penalized under the President’s Plan. Under this plan, the uninsured will be
charged a flat rate, or a percentage of the income relative to the cheapest
insurance plan in their area. Those who cannot afford even the cheapest plan in
their area will not be charged, and those below the poverty level will not be
charged (Obama “The President’s Proposal”).
Under the President’s Plan, employers
with more than 50 employees will be forced to pay a tax if they are not
offering a plan of their own, meaning that their employees are receiving
tax-payer funded programs. Small business will be exempt from this provision,
and will receive up to “$40 billion” in tax credits (Obama “The President’s
Proposal”).
The President’s Plan will also require
insurance agencies to submit any rate increases to a federal or state run
agency that will determine whether or not the increase is fair. If the federal
agency determines that it is not fair, then the insurance agency will be
informed of ways to offset the increase to consumers (Obama “The President’s
Proposal”).
Depending on the size and income of a
family, the President’s Plan will issue tax credits to offset the cost of
insurance. Families on the low end of the income scale will have huge tax breaks
and credits, while four member families making $88,000 per year will receive
smaller tax credits and breaks (Obama, “The President’s Proposal”).
From a free market standpoint, the
President’s plan, along with the House and Congressional plans which he used to
craft his own plan are fundamentally flawed. The President’s plan goes against
the free market, by regulating insurance companies, and dictating prices to
insurance companies, pharmaceutical corporations, and health care providers. The
President’s plan also seems to do nothing to allow insurance companies to
operate on an interstate basis. Most importantly, the President’s plan does
nothing to let consumers have a free choice in where they get their health
insurance. According to Cato Institute writer Michael Cannon “Letting Americans
control their health care dollars and breaking up the states’ monopolies on
insurance and clinician licensing (with “regulatory federalism”) would put
access to health care within reach of millions of Americans by putting downward
pressure on health care prices and health insurance premiums” (Cannon, “Yes Mr.
President; A Free Market Can Fix Health Care”). Thus, a true free market health
care system would not need reform, if consumers were to be allowed to make
their own decisions.
From a Socialist prospective, the
President’s plan is a step in the right direction. The plan still fails to
eliminate the insurance companies and the pharmaceutical corporations, who do
profit, from the equation. From a socialist standpoint, the entire “market”
would be regulated, in accordance with a centrally planned system. While we
will be seeing some regulations, and perhaps a tax on those who have plans that
are, according to Robert Gibbs “more than they need” (Finkelstein, “Obama
Reject Socialist Tag…”). In effect, we will be moving closer to a mixed
economy.
From the prospective of an advocate
for a mixed economy, the President’s plan is a perfect solution to the debate.
A mixed economist would favor a system that is heavily regulated, heavily
taxed, provides ways for the impoverished to be involved, and yet still allows
private companies to operate and private individuals to have a minimal amount
of choice. With the President’s new plan, it would be the cornerstone of a
mixed economic system. Private corporations would be involved in the process of
establishing plans for high-risk patients, yet this process would be regulated
by both state and federal regulatory agencies. In addition, the President’s
plan makes use of the strategy of taxing actions that they wish to eliminate,
instead of outlawing them altogether. For example, the plan will implement a
10% tax on indoor tanning salons and a 2.5% tax on the income of individuals
without qualifying coverage (Meckler, “Obama’s Health Plan Adds $75 billion to
Senate Bill). The President’s plan is devoid of the much debated “public
option”(Meckler, “Obama Renews Health Push”) which were coveted by those
wishing to move forward to a socialist economy. Without the public option, yet
with the large amount of regulation and taxation, President Obama’s plan is one
that appeals more towards supporters of a mixed economy than a socialist or
free-market economy.
The personal conclusion that can be
drawn from this is that the entire piece of legislation, and debate, is flawed.
Health care is not a human right, nor is it something that the constitution
rules to be a right or entitlement to the American people. The economic impact
will be negative and debilitating. The United States is already in a strain financially,
with a raising debt that is going to keep growing, and an ever weakening
dollar. While President Obama’s plan offers way to offset some of the cost for
the new health care system, most of these will not be enough to cover the cost
of this program. While the current health care system is admittedly
inefficient, it is not a true free market system at the moment. The President’s
plan will only add to the waste and inefficiency. The current health care
system does not allow for consumers or insurance agencies to operate outside of
state lines. Likewise, there are already regulations on the pharmaceutical
corporations, with agencies in place to enforce and further regulate drug
manufacturers.
The President’s plan is also unfair
to American’s who do not wish to purchase health insurance. By putting a fine
on the income of citizens who decide to go without health insurance, it is
essentially the same as taking the choice away from them. The citizen has the
choice to either pay the government a fine, or buy insurance. American citizens
will be left without the choice to pay. While there will be exemptions made for
the impoverished, even those above the poverty level should have the freedom to
make their own choice in the market place. The choice of insurance that a
citizen will have will also be limited to local insurance agencies. Thus, under
the Obama plan, the American citizen will have less choice than under the
current system.
What will this do to the economy of
the United States though? In effect, it will be another step towards cementing
the United States as a mixed economy. If the proposed taxes and fines that the
president has proposed to pay for the plan do not actually bring in the
budgeted revenue, the United States will have to either borrow more money, or
print more. This will in turn weaken the value of the dollar further. Likewise,
the proposed taxes will weaken the financial strength of the wealthier
citizens, which will not do anything create jobs or strengthen the economy.
In closing, the President’s plan is
not at all a free market plan, but is not a fully socialist plan. The
President’s plan is a mixed economic solution to the problems created by an
already mixed economic system. While the plan will definitely be beneficial to
the impoverished in the short term, it will not do anything to raise them above
the poverty level. Instead, it will only serve to pull the wealthy down, and
weaken the amount of market place freedom.
Works Cited Page.
Obama, Barack “The President’s Proposal” February 22, 2010 http://www.whitehouse.gov/sites/default/files/summary-presidents-proposal.pdf
Cannon, Michael F. “Yes, Mr. President; A Free Market Can Fix
Health Care” Policy Analysis 650 Oct 21, 2009 1-16 http://www.cato.org/pubs/pas/pa650.pdf
Finkelstein, Mark “Obama Rejects Socialist Tag but Would Tax
Health Care Plans If More Than People ‘Need’” NewsBusters Feb 25, 2010 http://newsbusters.org/blogs/mark-finkelstein/2010/02/25/obama-rejects-socialist-tag-would-tax-health-plans-if-more-people-
Meckler, Laura “Obama’s Health Plan Adds $75 Billion to
Senate Bill” Wall Street Journal Feb 23, 2010 http://online.wsj.com/article/SB10001424052748704454304575081521241772924.html?mod=loomia&loomia_si=t0:a16:g2:r3:c0.10723:b30968408
Meckler, Laura “Obama Renews Health Push” Wall Street
Journal Feb 23, 2010 http://online.wsj.com/article/SB10001424052748704454304575081264262957600.html?mod=loomia&loomia_si=t0:a16:g2:r1:c0.10723:b30973482
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