NCPA - National Center for Policy Analysis

ADDING INSULT TO INJURY: THE BAUCUS HEALTH PLAN IMPOSES NEW TAXES ON THE SICK

October 16, 2009

Public support for health care reform is based on a desire to help the sick or, at the very least, to protect the non-wealthy from the financial impact of illness, chronic disease, and accidents.  Unfortunately, the reform proposals under active consideration in Congress do precisely the opposite, say Heritage Foundation researchers Robert A. Book, Guinevere L. Nell and Paul L. Winfree.

In particular, the Baucus health reform proposal, recently passed by the Senate Finance Committee, imposes new taxes on those who need health care the most and on lower-income people with the least ability to pay -- in some cases to fund coverage subsidies that will primarily go to young, healthy people with moderate incomes.

The proposal would impose:

  • Higher taxes on taxpayers at all income levels who face high out-of-pocket medical expenses or have high-cost health plans, including patients living in poverty.
  • "Annual fees" (i.e., taxes) on the medical device and pharmaceutical industries, which would have to be passed on in the form of higher prices to patients who pay out of pocket, and to insurance plans, which will have to raise their premiums.
  • An "annual fee" on insurance companies that will be passed on to patients directly in the form of higher premiums.

Despite President Obama's promise not to raise taxes "one dime" for those earning below $250,000, this proposal would increase taxes on households with incomes substantially below that level -- and especially on households facing the worst health problems, say Book, Nell and Winfree.

The revenue from these taxes is intended to offset premium subsidies for households with incomes below four times the federal poverty level (FPL), but these taxes would be imposed on Americans who need medical devices or prescription drugs, have high out-of-pocket costs, or pay their own health insurance premiums -- including many households with incomes below four times the federal poverty level (FPL).

Source: Robert A. Book, Guinevere L. Nell and Paul L. Winfree, "Adding Insult to Injury: The Baucus Health Plan Imposes New Taxes on the Sick," Heritage Foundation, WebMemo No. 2651, October 15, 2009.

 

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