Obama Plans ‘Backdoor’ Tax to Pay for Health Plan

Obama Plans ‘Backdoor’ Tax to Pay for Health Plan

March 13th, 2010

By Dan Weil, Business News

 Obama flips the bird to those who pay taxes

A stealth provision in President Obama’s latest healthcare proposal dramatically increases taxes on the wealthy — extending Medicare taxes for the first time to “unearned” investment income.

The new 2.9 percent tax would apply to interest, dividend, annuity, royalty, and rent payments.

Under current law, Medicare payments come from salaries alone.

But Obama wants a Medicare tax to be paid on the investment income accrued by individuals making more than $200,000 a year and couples making more than $250,000.

The plan doesn’t make it clear if capital-gains income is subject to the 2.9 percent tax. If it is, the wealthy would face a capital-gains tax rate of 22.9 percent. That’s because the rate already is slated to increase to 20 percent next year from 15 percent currently.

In addition, households with income above $250,000 would see another 0.9 percent added to their Medicare tax on their normal working income. It would put their rate at 2.35 percent.

The new healthcare overhaul is expected to cost $950 billion.

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We’re not buying it, Obama

We’re not buying it, Obama

March 13th, 2010

By Michael Goodwin, NY Post

 Sorry Obama, we’re not buying what you are selling

Once again, Barack Obama is a happy pitch man. He’s on stage with a microphone, jacket off, sleeves rolled up, his voice rising and falling as he tries to whip the big crowds into revival-tent fervor.

He’s still peddling Hope & Change, although now he calls it health-care reform. He swears his miracle elixir will save your life, your money and your country.

It will do anything you could possibly want — unless you want the truth.

Then you’re squat out of luck. See, truth is a pre-existing condition not covered by ObamaCare.

We used to arrest people for selling snake oil. Now we elect them.
“No false claim left behind” is the perfect summation of President Obama’s last-gasp push for a bill that hasn’t even been written. No matter details or cost, it’ll cure whatever ails you and America.

He’s for it, whatever it ends up saying. Just as he was for the House bill and the Senate bill, both before and after they were written, although they contradicted each other in key ways.

And we have to do it now — now, for history, before it’s too late.

For Obama, it’s already too late. The public took a leap of faith on him once, and his expensive potions are making the country sicker. The sell-by date on his promise machine has expired.

He and Nancy Pelosi might browbeat, scare and bribe enough weak-kneed House Democrats to get a party-line majority, but he’s already lost something far more important than whether the health takeover squeaks by.

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The Land of Entitlements

The Land of Entitlements

By David S. Van Dyke

Even though more than half of government spending goes to entitlements, the era of entitlements is a relatively recent phenomenon in the history of our country.
Democrats are eager to defend creating yet another healthcare entitlement by flatly stating “everybody loves Medicare.”  To put this in context one must realize that there are no Medicare recipients alive today who have first hand knowledge of being without Medicare while elderly.  Some may remember their parents or grandparents surviving well into old age without Medicare, but not themselves.  Very few alive today remember a time without Social Security.  Within the space of a human lifespan our society has become a culture conditioned to accept (and expect) entitlements as the norm without questioning the consequences.  It has been a very effective strategy to enlarge government.
Social Security was enacted in 1935 (75 years ago).  The country was suffering in the Great Depression.  Communism was actually popular in this country at the time.  The very concept was unprecedented.  It is important to realize that the average life expectancy in 1935 (all races, both sexes) was 61.  Social Security was originally intended to provide supplemental retirement income for workers (and their spouses) after they retire and reach the age of 65.  At the time Social Security was enacted it was palatable to the American public and a reasonably safe bet for the federal government.  Most people didn’t live long enough to become eligible.  For several decades Social Security did not appear to be the obvious Ponzi scheme that it is.  At its inception there were something like 16 workers for every Social Security recipient and the associated payroll taxes were low.  Left alone, Social Security would be solvent to this day and perhaps far into the future.  But things changed.
Before too long Social Security was funding all sorts of things for which it was never intended (e.g., disability, dependent children).  Congress viewed it as a giant vote buying machine.  Further, they saw that great big pile of money from Social Security payroll taxes and couldn’t help but spend it and replace it with worthless IOUs.  Perhaps more worrisome, within 30 years of being enacted the average life expectancy had increased to about 70.  As a result, at over time there were more and more living eligible recipients and fewer workers per recipient.  By this time it was politically impossible to stop the Social Security juggernaut.  Every worker who had been taxed for this entitlement expected to receive it.  Many had parents or grandparents who had come to depend on their Social Security payments.  What was originally envisioned as a supplemental income came to be viewed as a total government funded pension.  If the money collected through payroll taxes had not been spent as fast as it came in, Social Security might still be solvent today.  But this is not the case.
Estimates vary, but right now the Social Security Administration is posting an unfunded liability of about $38 trillion.  The current worker to recipient ratio is just under 3:1 and is expected to reach 2:1 within only a few years as baby boomers start to retire.  For the first time Social Security is paying out more in benefits than it is collecting in payroll taxes.  The nation is staring down the barrel of a very real financial crisis… and politicians are fretting about the planet being slightly warmer 90 years from now.
Had Social Security never been enacted or (at least) had been reformed when we had a chance, our country would be in much better financial health.  I clearly remember my father complaining that my maternal grandparents drew far more from Social Security than they ever paid in.  This is probably true for every generation ever since Social Security was enacted.  My father passed away last year at the age of 90 (he retired when he was 63) and my mother is still alive at age 87.  They have drawn many times more from Social Security than they ever contributed.  We are today witnessing the inevitable implosion of the largest Ponzi scheme ever devised by mankind.  Social Security essentially defines “unsustainable.”  We can buy some time, but none of the necessary measures are palatable to either politicians or the American public.
The obvious remedies are to raise the age of eligibility to at least 70 (today the average life expectancy is nearly 79), increase Social Security withholding taxes, establish some form of means testing (i.e. don’t pay Social Security benefits to retiring millionaires) and perhaps somehow correlate total lifetime benefits paid with total contributions.  These measures will buy us time, but they won’t fix the fundamental problem.  In short, it is utterly impossible to continue down the path FDR established 75 years ago.
If Social Security doesn’t pose enough of a threat, left unchecked, Medicare will utterly bankrupt the nation.  Medicare was enacted in 1965 following other “Great Society” welfare measures.  At the time the average life expectancy was 70.  More significantly, medical care was not as sophisticated or expensive as it is today.  There were few effective interventions for the big killers, cardiovascular disease or cancer in 1965.  Who could have predicted the absolute explosion in medical and pharmacologic innovation?  Who could have anticipated that life expectancy would continue to increase?  Consider how common such procedures as total knee and hip replacement are today.  Think about coronary artery bypass graft surgery, stents, pacemakers, implantable defibrillators, intraocular lens replacement, advances in the diagnosis and treatment of cancer, advances in the management of diabetes and the myriad of drugs that treat and prevent disease.  No, to LBJ and the liberal Congress of 1965 Medicare appeared to be a relatively small ticket, vote buying initiative.  The problems Medicare (and Medicaid) present today nearly dwarf Social Security but we can employ the same tactics to buy some time while we formulate a more realistic solution for the long run.
The fact is that our current entitlement programs threaten to consume virtually 100% of GDP if left unchecked.  In truth, we can’t go on much longer without making some unpopular changes.  Why Obama is pushing for an expansion of our current entitlement system defies logic.  We can’t even afford to maintain the programs we already have.
The generations of our parents and grandparents gave rise to these entitlement programs and milked them for all they were worth.  Let us pray that the generations of our children and grandchildren will learn the lesson of such folly.  Let us pray that all of us wake up from our entitlement stupor in time to enact necessary changes before then entire nation falls prey to a true financial and social crisis.

The Problem with Blaming Insurance Companies

The Problem with Blaming Insurance Companies

By Brenton Stransky

Earlier this week, President Obama addressed a crowd of gushing students and selected guests at Arcadia University in a suburb of Philadelphia to promote his final push for healthcare reform.  It was a beautiful day for late winter, magnifying the gathered group’s existing enthusiasm and after the usual “I/we love you(s)” from the crowd the President wasted little time before turning to his usual tones of demagoguery.
A moment or two into the speech, the President characteristically accused the Insurance Companies of arbitrarily causing the extra inflationary costs of healthcare coverage and for other ills of our healthcare system:
See, these Insurance Companies have made a calculation. Listen to this. The other day, there was a conference call that was organized by Goldman Sachs. You know Goldman Sachs. You’ve been hearing about them, right? (Laughter.) So they organized a conference call in which an insurance broker was telling Wall Street investors how he expected things to be playing out over the next several years, and this broker said that Insurance Companies know they will lose customers if they keep on raising premiums, but because there’s so little competition in the insurance industry, they’re okay with people being priced out of the insurance market because, first of all, a lot of folks are going to be stuck, and even if some people drop out, they’ll still make more money by raising premiums on customers that they keep.
This statement is absurd and disheartening because it clearly shows that the President is willing to make any claim and accentuate any fact in order to pull his healthcare reform hopes from the nosedive it is in. He’s not alone. For years the left and some on the right have accused the big Insurance Companies of inconsiderately raising the costs of insurance premiums in order to pad their pockets.  The President proposes and some unwittingly agree that we would be better off if the government controlled the types of healthcare insurance provided and the cost for such coverage. 
What this overly simplified argument leaves out is that the premium increases by the Insurance Companies are to offset the rising “benefit expenses” that they payout. Premium increases are the Insurance Companies attempt to stay in business.
In the same speech the president cited an example of the exorbitant increases to premiums that effect everyday Americans:
Every year, they drop more people’s coverage when they get sick right when they need it most. Every year, they raise premiums higher and higher and higher.
Just last month, Anthem Blue Cross in California tried to jack up rates by nearly 40 percent — 40 percent. Anybody’s paycheck gone up 40 percent?
Perhaps most people’s paychecks haven’t gone up 40% but if the government runs healthcare coverage it will further reduce competition or eliminate it all together. Anybody saved a ton of money on car insurance by switching companies lately?  Competition is good because it forces companies to be honest and as was seen in Hawaii, government intervention greatly reduces competition.  It already has greatly reduced competition.
Anthem Blue Cross’s parent company is WellPoint (the second largest insurance company in the country) and what the President won’t tell you is that WellPoint’s net income dropped 30% from 2007-08 to 4.2% of revenue according to the 2008 annual report.   This drop was the result of several factors including higher claims payouts; people are getting older and new medicines cost more.  In 2008, the largest 100 companies in the country averaged a profit margin of 5.6%.
It has been increasingly noted lately that insurance companies aren’t the hugely profitable corporations they are made out to be and we might benefit from digging into the numbers.  According to Fortune, the ten largest healthcare insurance providers saw an average profit decrease of 52% in 2008 (the latest year for which information is available) from the year prior. In fact, the entire “Healthcare: Insurance and Managed Care” sector of the SP500 stock index ranked 33rd of 51 total sectors for total profitability in 2008. 

The profit level observed in the healthcare insurance industry in 2008 wasn’t from just a bad year. In fact the five-year average profitability numbers shows that the “healthcare insurance industry” was only the 23rd most profitable. 
There is something at stake today greater than just the nationalization of the healthcare insurance industry, as dire as that is.  If the government is able to successfully argue that the 23rd most profitable industry in our country is too profitable they might easily argue that the 22 more profitable industry groups are too profitable. And at least eight of the top ten most profitable industries are in some way vital to our well being and as ripe for government take over.  Historically, nationalization is a slippery slope.
One of the problems with government takeovers of private industry is that the government cannot create an efficient solution like we are led to believe they can.  A company like WellPoint spends roughly 80-85% of its premiums on paying for medical expenses incurred by participants, leaving the rest for administrative costs and profit. 
If the government is to effectively drive down premiums they would have to cover less participant expenses (which they have promised time and again not to do), pay less for the procedures or drugs than the insurers are paying now (which might cause a lower supply of physicians willing to take government insurance, more lines for care like in parts of Europe or a reduction in the quality of care) or manage more efficiently the administrative costs to something less than the 15-20% the insurance companies have.  We should note that no example exists of a government organization running more efficiently than a private competitor.  We should instead be aware of the sleight of hand where the government keeps health insurance premiums the same but raises taxes to pay for it.
In the end, the healthcare insurance providers are certainly not gouging their policyholders anymore than the food services industry is (which was the most profitable industry in 2008). It appears that as the left becomes more desperate to save their pet project they are moving even further away from substantive arguments and using even more misleading perversions of the truth, exactly the opposite of what they promised earlier this year.  But what did we expect.
Brent Stransky is a co- author of “The Young Conservative’s Field Guide” which is scheduled for release by Nimble Books on April 1st, 2010. The authors can be contacted through their website at www.aHardRight.com.

A group of student protesters step on a poster of U.S President Barack Obama as they protested against Obama’s plans to visit Indonesia, outside the U.S. consulate in Medan, Indonesia’s North Sumatra province March 12, 2010

A group of student protesters step on a poster of U.S President ...

Reuters Fri Mar 12, 6:37 AM ET

A group of student protesters step on a poster of U.S President Barack Obama as they protested against Obama’s plans to visit Indonesia, outside the U.S. consulate in Medan, Indonesia’s North Sumatra province March 12, 2010. REUTERS/Tarmizy Harva (INDONESIA – Tags: CIVIL UNREST POLITICS EDUCATION)