Obamacare is a Devastating Tax on the Poor and Uninsured

Mises Daily: Thursday, November 12, 2009 by Eric M. Staib

Given the recent announcement that the government’s measure of unemployment has hit 10.2 percent, and given that the official House version of Obama’s healthcare plan, HR 3962, has now passed, a close examination of the effects of “Obamacare” on the labor market is important. It will be no surprise to readers of this site to learn that the Democrats’ bill will seriously harm precisely those poor and uninsured citizens it is ostensibly designed to help. The harm will come by compounding mass unemployment and depriving these citizens of consumption choices.

Obamacare as Labor Tax

According to pages 269–273 of the gargantuan bill,Download PDF employers of full-time workers will be required to cover at least 72.5 percent of the premium of the least expensive health-insurance plan available that fulfills the bill’s minimum criteria of “acceptable coverage.” In cases in which family coverage is provided, 62.5 percent of the premium is to be borne by the employer. Depending on the specific plan and other variables such as location, this amounts to a direct labor tax of approximately $300 per month for an individual, or nearly $700 for family coverage.

The implication of this increased cost is that workers whose revenue productivity is less than $300 per month higher than their wages will be laid off, or have their hours cut to the level that will classify them as part-time. Ignoring established labor law, the bill leaves the definition of part-time and full-time to the discretion of the Commissioner of Obama’s massive new health bureaucracy. The lower the new “Health Choices Commissioner” sets the threshold in an attempt to maximize the number of people receiving the employer contribution, the more hours of production employers will have to shave off to push their employees under the threshold, and the less those workers will take home in wages each week.

Unfortunately, the bill also requires employers to cover a (smaller) percentage of the premium of the same minimum plan for part-time workers. The effects here are even worse than above, because they weaken the ability of an employer to escape the labor tax by employing his workers for fewer hours. Instead, with a labor tax on part-time workers as well, some low-productivity workers who are currently only working a few hours per week will be forced out of work entirely.

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The Immorality of Taxpayer Funded Abortion

by Ron Paul

Healthcare continues to dominate the agenda on Capitol Hill as House leadership and the administration try to ram through their big government healthcare plan. Fortunately, they have been unsuccessful so far, as there are many horrifying provisions tucked into this massive piece of legislation. One major issue is the public funding of elective abortions. The administration has already removed many longstanding restrictions on abortion, and is unwilling to provide straight answers to questions regarding the public funding of abortion in their plan. This is deeply troubling for those of us who do not want taxpayer dollars funding abortions.

Forcing pro-life taxpayers to subsidize abortion is evil and tyrannical. I have introduced the Taxpayer’s Freedom of Conscience Act (HR 1233) which forbids the use of any taxpayer funds for abortion, both here and overseas.

The most basic function of government is to protect life. It is unconscionable that government would enable the taking of it. However this is to be expected when government oversteps its constitutional bounds instead of protecting rights. When government supercedes this very limited role, it cannot help but advance the moral agenda of whoever is in power at the time, at the expense of the rights of others.

Free people should be left alone to follow their conscience and determine their own lifestyle as long as they do not interfere with other people doing the same. If morality is dictated by government, morality will change with every election. Even if you agree with the morality of the current politicians and think their ideas should be advanced, someday different people will inherit that power and use it for their own agendas. The wisdom of the constitution is that it keeps government out of these issues altogether.

Many say we must reform healthcare and treat it as a right, because that is the moral thing to do. Poor people should not go without healthcare in a just society. But too many forget the immorality of stealing from others in order to make this so. They also forget the morality and compassion that naturally exists in communities when government is not fomenting class warfare with wealth redistribution programs.

Many doctors willingly volunteer, accept barter or reduced payment from patients who can’t pay, or give away services for free. Many charities help the poor with food, housing and healthcare. These charities are much more responsive and accountable for helping people in need than government ever could be. This is the moral way that private individuals voluntarily deal with access to healthcare, but government intervention threatens to pull the rug out from this sort of volunteerism and replace it with mandates, taxes, red tape, wealth redistribution, and force.

The fact that the national healthcare overhaul could force taxpayers to subsidize abortions and may even force private insurers to cover abortions is more reason that this bill and the ideas behind it, are neither constitutional, moral, nor in the American people’s best interest.

Original Article

Ron Paul on the Alex Jones Show – December 11, 2009

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Health Insurance: Part of the Problem or Part of the Solution?

by D. Saul Weiner

Watching the so-called health care debate in this country, the health insurance industry obviously has come under fire. Why is this? In part, it is due to being in the position of being the bearer of bad news. The insurance company informs us that our premiums are rising yet again, that we are not covered for something that we thought we were, or that we will no longer be offered coverage. Even if our expenses are covered, we may find it frustrating and confusing to go through all of the paperwork required, especially when we are confronted with a major health problem.

From a political standpoint, there is another reason for this. Politicians find that they can gain support for their schemes when they can frame the problems that they are trying to address as the result of the behavior of a bad actor (i.e. a scapegoat) that may or may not have very much to do with the problem at hand. Demagoguery will elicit support for their scheme to punish the bad guys and drive attention away from an objective assessment of whether or not their scheme is likely to improve conditions or make things worse. Bad guys are chosen, like so much in politics, based on the path of least resistance. Of course, the politicians are not likely to highlight their own role in creating the problem. And while they may know that past actions taken by the AMA have contributed significantly to the health care crisis, they also know full well that many people like their own doctor and regularly watch handsome and compassionate MD’s on TV who perform heroic acts for suffering humanity. On the other hand, people rarely, if ever, see handsome and compassionate health insurance executives on TV going to bat for patients in need. For this reason and the ones mentioned earlier, health insurers make an inviting target.

Note that my intent here is not to rationalize the role that health insurance plays in the current environment. First, I will briefly discuss how some of the problems that people associate with today’s health insurance companies are not inherent. Then I will discuss how health insurance companies operating in a free market actually could play a critical role in solving the problems of cost containment and access to services that seem so intractable in the current environment.

The first thing to note in analyzing “health insurance” offered in the United States today is that most of it is not really insurance at all. I am referring to the benefits offered through employers. Insurance, for one thing, refers to the spreading of the expected costs of coverage proportionately amongst people who pose similar levels of risk. Thus, for example for life insurance, there are different rates for males and females, people of different ages, smokers and non-smokers, and so forth. For employer-based health insurance, employers pay most of the cost and the employees each typically pay the same cost (except if they are insuring other family members). In such a context, there is little financial incentive for an employee to minimize his risk or to economize in his usage of health care. What is more, due to mandates, insurance must cover a great many benefits that companies and individuals would not pay for, if they were allowed to choose. In effect, part of the premium represents insurance and part of the premium is a tax which redistributes wealth to providers with political clout.

One might wonder how it became the norm for health insurance to be offered through one’s employer, when the need for health care is independent of one’s working status. It turns out that this arrangement had a lot to do with government intervention. During WW2, when resources were scarce and wage increases were limited by law, as a workaround companies offered fringe benefits such as health insurance and pension plans as incentives in order to attract sufficient workers. The costs for such coverage were tax deductible to employers (though not for individuals buying their own insurance) and this also encouraged our current system to evolve as it did. In light of all this, one can see that many of the problems that people today associate with health insurance are not inherent, but are the result of perverse incentives which have shaped the current environment. We might reasonably ask how things might be different if free market conditions prevailed.

We know that, in a free market, over time goods and services tend to improve in quality and become less expensive. Since that has not been the case, for the most part, in health care, we must consider the possibility that government interventions have interfered with that process. While medical licensing, patents, and FDA regulations have undoubtedly played a major role in the costliness of today’s health care, interference in the free market for health insurance may be the straw that is breaking the economy’s back. To see why this is the case, consider the role that health insurance in a free market could play in driving costs down and quality up. There have always been medical entrepreneurs who have found more cost-effective approaches, but health insurance companies have never been free to pay for only the most cost-effective treatments. The “approved treatments” are subject to the determination of medical boards which, not surprisingly, favor established treatments and look askance at innovations which have not yet been widely accepted in professional circles, regardless of the promise that they hold or the appeal they may have to patients.

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Ron Paul: Healthcare “Reform” Will Make a Flawed System Immeasurably Worse

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