Tuesday, March 23, 2010

The Triumph of the Insurance Companies

Scott Richert on the real winners of the health care debacle. To quote:

The Republicans who opposed the bill knew that, which is why they spent all of their time talking about abortion and other side issues rather than attacking the biggest corporate welfare plan in American history. When all is said and done, this gift to the insurance companies will dwarf the bailouts of the banks and the auto industry. The Republicans wanted to make sure that they would get their cut of the cash, too.

The big losers, of course, are the businesses that face fines if they do not provide adequate health insurance to their employees (Caterpillar estimates that the legislation will cost them $100 million, which likely means that their next plant will be built in Mexico or China rather than in Illinois), and those who are self-employed or work for small businesses exempt from the requirement to provide insurance. Like the businesses, they will be fined unless they purchase health insurance.

In the worst position will be those who do not currently have health insurance because they truly cannot afford it. They will be eligible for tax credits to make their mandatory insurance more affordable, but those tax credits will be nonrefundable, so if they owe very little or nothing in taxes, the credits will do them little to no good. They still won’t be able to afford health insurance, but now they will be forced to pay a fine—a minimum of $95 or one percent of their income (whichever is higher) in the first year, ratcheting up to a minimum of $695 or two percent of their income by 2014.

The New York Times has this to say:

There would be costs to consumers, too. Affluent families would be required to pay additional taxes. Most Americans would be required to have health insurance and face federal penalties if they do not buy it. And it is still unclear what effect, if any, the legislation would have on rising out-of-pocket medical costs and premiums.

But there is no question that the legislation should benefit consumers in various ways. Beginning in 2014, for example, many employers — those with 50 or more workers — could face federal fines for not providing insurance coverage. Several of the other changes would take effect much sooner.


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