Sdi 2010 Midterms Impacts Updates


Health Care Bad – Economy



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Health Care Bad – Economy


Individual mandate will cause massive jobs loss

Robert Book, PhD 11-19-2009 “The Senate Health Bill: How Mandates Kill Jobs and Punish Poor Workers”, Senior Research Fellow, Health Economics,



http://blog.heritage.org/2009/11/19/the-senate-health-bill-how-the-mandates-kill-jobs-and-punish-poor-workers/

Last night, Senate Majority Leader Harry Reid released his giant version of the Senate health care bill, H.R. 3590. A first look at the bill – which is 2,074 pages long – shows yet another attempt to use taxes to punish uninsured Americans and punish companies that hire workers from low-income families, especially single parents. If you wanted to punish the poor and kill the job prospects of people who need jobs the most, this would be an effective way to do it. The Individual Mandate. First, there is the “individual responsibility” provision in Section 1501 (pages 320-340). This would require anyone who fails to obtain a qualifying health plan – with a benefit package to be defined later by bureaucrats – to pay an annual tax penalty of $750 per adult family member and $375 per child, with a maximum penalty of $2,250 per family. These penalties will be phased in from 2014 to 2016 and then indexed for inflation, which means they are likely to increase nearly every year. These taxes are fixed amounts based on family size, not income. The rich will not pay more, and the middle class will not pay less (although the poor may qualify for exemptions). This is even worse than the House bill, which imposed a tax equal to 2.5 percent of modified adjusted gross income above the minimum income necessary to file a tax return. A family of at least two adults and two children is actually worse off under the Senate bill if they make less than $99,350 a year, and worse off under the House bill if they make more. The only nod to affordability is a “hardship exemption” if the lowest available premium for a bare-bones plan is more than 8 percent of your income. But that saves you money only if your income is less than $28,125 a year. There are, however, a few exemptions. You won’t have to pay the tax if you are a member of a qualified religion, as described in Section 1402(g)(1) of the Internal Revenue Code, or if you are a member of a “Health Sharing Ministry.” You also won’t have to pay the tax if you are an illegal alien (assuming you can prove your status) or if you are incarcerated, or if you reside outside the United States for most of the year. The Employer Mandate. Then there is the “employer responsibility” provision (Section 1511-1513, pages 346-357). Companies with more than 50 employees are required to offer qualified health plans – with a benefit package to be defined later by bureaucrats – to their full-time employees or pay a tax of $750 per full-time employee. That’s a lot cheaper than providing health insurance, and the $750 is just a tax – it doesn’t count towards the employee’s premium. However, an employer who does offer qualifying insurance isn’t entirely off the hook. Suppose an employer offers insurance, but has an employee from a low-income family who qualifies for a premium subsidy in the “health insurance exchange” and decides to accept it. In that case, the employer is stuck with a tax penalty of $3,000 for that employee, and every other employee who qualifies and makes that same choice – unless it’s more than a quarter of the employees, in which case the tax is capped at $750 times the total number of full-time employees. (Workers will be permitted to opt out of their employer’s plan only if they qualify for a subsidy, have insurance through another family member, or if the employer covers less than 60 percent of their premium.) Hurting the Poor. In other words, if a company has a lot of low-income workers, they can save money by dropping their health plan and just paying the $750 per-employee tax. (And they can make as many employees as possible part-time.) However, if they have mostly middle-income workers, they face a heavy penalty — $3,000 – every time they hire a worker from a low-income family. This goes by the employee’s family income, not the income the employee is paid by any particular company. So a company could save $3,000 by hiring, say, someone with a working spouse or a teenager with working parents, rather than a single mother with three children. Even worse, if at least a quarter of the employees qualify for a premium subsidy based on their income and family size, the company is going to end up paying the same $750 per-employee tax – whether they offer insurance or not! So companies with a lot of low-income employees will essentially be encouraged to drop their health plans entire, dumping the remaining higher-income employees into the federal exchange at their own expense. Seriously Bad Policy. In other words, employers will have a strong tax incentive to lay off the workers who need the jobs most – people without other sources of income. How will employers know who those workers are? The federal officials will tell them when they send the tax bill (Section 1412). Employer will be required (Section 1513) to inform the IRS of precisely who their employees are and during which months they carried insurance, to make sure the IRS knows who has to pay the “individual responsibility” penalty.

Health Care Bad – Economy


Economic collapse

Massimo Calabresi “Unemployment dips, but long-term joblessness remains a concern” 2009,



http://www.time.com/time/business/article/0,8599,1915185,00.html

For all the relief over the jobless figures released by the Bureau of Labor Statistics Friday morning — 247,000 jobs were lost in July, far fewer than economists had expected — a dark problem lurks in the numbers: dangerously high levels of long-term unemployment in America. Unlike recent recessions, the current economic crisis has been characterized by skyrocketing numbers of those out of work for three, six or more months at a time. Economists worry that the shock of the past year's financial crisis may have driven the U.S. into a period of permanently high unemployment similar to what Europe has suffered for decades. While overall unemployment dropped from 9.5% in June to 9.4% in July, the number of long-term unemployed (those jobless for 27 weeks or more) increased to 4.9 million, up from 4.4 million in June. Viewed another way, 32.5% of the total unemployed had been looking for work for longer than half a year, up from 28.9% in June. "This recession is taking people a very long time relative to past recessions to find another job," says John Irons, policy director at the Economic Policy Institute in Washington. Traditionally the U.S. has been able to maintain unemployment at 5% or less, while Europe has for the past few decades been stuck at 8%, even during periods of economic growth. (See "What to Expect When the Recession Ends.") There are several reasons to worry about the high long-term unemployment numbers. On the individual level, the longer you stay unemployed, the more unemployable you become. People lose job skills, social skills and the will to search for a job as they spend time out of work. Unemployment affects individuals' sense of well being, producing higher rates of depression and lower levels of life satisfaction. Studies have shown mixed results as to the effect of unemployment on health. On average all job losers tend to face a permanent reduction in their salary, and that is even more common for the long-term unemployed. Long-term unemployment is also dangerous for the economy as a whole. One quarter of the long-term unemployed permanently leave the workforce, a recent study by the Congressional Budget Office found, producing increased loss of output in the economy. Long-term unemployment burdens social services, diminishes spending levels in the economy and drains overall savings. It can also affect unemployment among young, first-time job-seekers. "Long-term unemployment is debilitating for people trying to find jobs in the first place," says Professor James K. Galbraith of the University of Texas at Austin. The more long term unemployed there are already competing for jobs with long résumés, the harder it is for first timers with no work experience to get the job, thereby tossing them into the pool and sustaining the high rate. (See "Great Depression 2.0: Tracing the Meltdown.")



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