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Drudge has been pumping up the fact that the Obama administration would not rule out the possibility of raising middle-class taxes to pay for health care legislation. While this is worth highlighting, it shouldn't distract attention from the fact that the health care bills currently being proposed all include a middle-class tax hike in the form of a mandate requiring that individuals purchase health insurance.

It's true that current proposals offer subsidies to help people buy insurance, but even the more generous subsidies in the House Democratic health care bill cap off at 400 percent of the federal poverty level, or $43,320 for individuals. Yet if you look at Census data, 8.5 million of the uninsured have incomes of between $50,000 and $74,999, while an additional 9.1 million have household incomes of $75,000 or more. We can't put a precise number on the full cost of the mandate to the middle class based on these statistics. For instance, Census data refers to "household" income which in some cases could mean individuals but in other cases could mean families, and we don't know how the uninsured population breaks down within the over $75,000 group (i.e., how many of them have household incomes of between $75,000 to $85,000 vs. how many are above $200,000). But what is pretty obvious is that there will be millions of middle-class Americans who won't qualify for subsidies, yet will be forced to either buy insurance or pay a fine. While people focus on the penalty aspect of it, if you're making $45,000 a year and the government begins forcing you to spend thousands of dollars each year for a product, that's a lot of money, and it's undeniably a tax on the middle-class.

And there's also something else insipid about the idea of mandates. While those advocating mandates accuse those Americans who are uninsured by choice as being burdens on the system, there's a flip side to that. Millions of the uninsured are young and healthy and simply don't spend enough on medical care each year to justify the annual cost of premiums. If Obama gets his way, they'll be forced buy something that isn't a good deal for them so that older and sicker people can obtain more affordable insurance. If liberals want to argue that it's a moral imperative that government make it affordable for sick Americans to get health insurance, they'll have to be forced to acknowledge that the cost of doing so will have to be paid by others -- and some of that burden will be borne by the middle class.

View all comments (11) | Leave a comment

Dan| 8.3.09 @ 2:35PM

Too convaluted to follow, or to make the electorate follow.

Far better just to hit hard on the punitive and coercive aspects of the legislation, all of which is unamerican.

And besides that, of course, to hit hard on the financing of the proposed legislation.

Aaron| 8.3.09 @ 3:08PM

In response to a bill without Republican support; "We will have contingencies in place. These plans will likely be considered as a last resort, but they are on the table," Schumer told reporters on a conference call. He declined to elaborate.

I think its time we Americans that are opposed have our own "contingencies" in place for this September.

Liberal Reader| 8.3.09 @ 6:09PM

Mr Klein --

I'm not an economist or an accountant, and frankly I find the health care story difficult to keep up with.

However, there is good reason for anyone in the middle class to fear that if they have not yet lost their health insurance, they may well lose it in the next five to ten years.

The prices are going up faster than anyone imagined fifteen years ago, busting families, small business, and state governments.

Medical costs are affecting everyone now; they'll continue to do so.

The Democrats believe they can pay for the health reform with Medicare savings and a tax on the wealthiest Americans. It may be they cannot, but that doesn't mean we shouldn't do it. If the middle class does get hit with a modest tax increase, maybe one less trip to Starbucks per day, then so be it.

Garfield Secondo| 10.29.10 @ 7:00AM

I totally agree with you. The cost will raise tremendous.

Garfield Secondo| 10.29.10 @ 7:00AM

I totally agree with you. The cost will raise tremendous.

Liberal Reader| 8.3.09 @ 6:12PM

One other thing:

Thank you for writing a criticism of the Health Care bill that does not warn readers that Big Black Barack, the Illegal Alien from Kenya, is coming to Kill Your Poor Old Grandmother -- which is apparently what most other conservative commentators are running with.

Bob| 8.3.09 @ 7:23PM

You should all know that Good Ole' Tex only has a rudimentary knowledge of adverse selection and proved it with his responses. And then, he doesn't even understand that health insurance premiums are not "allocated" by state, they are "calculated" by state. Allocation assumes a sum of money is divided. Then again, he only thinks he knows something about insurance.

But the point of my comment (and he completely missed it) is that if you allow people to purchase insurance across state lines it changes the risk profile by state and thus the cost structure. If Ol' Tex knew anything about actuarial costs, he would have known that. What will happen is that those in the NE would buy policies in the SW thereby increasing the cost of insurance for those that live in the SW.

But then again, you have to know insurance to understand that.

Jim O'Brien| 8.4.09 @ 7:47AM

When BHO declares that he won't increase taxes on the middle class, it's the same as telling us that his evacuations don't stink. He has already announced that he will let the Bush tax cuts expire, so he speaks with a forked tongue. Being a good Socialist, he will claim that the Bush cuts were all designed to benefit the rich. But the "middle class" knows better.

Michael Dooley| 8.4.09 @ 11:00AM

Dear Liberal Reader:

Far be it from me to defend daily runs to Starbucks. Personally, I would rather Starbucks patrons take their money and give it to one of the various food banks or to the Salvation Army. But that’s just me. (The parishes in my city of my denomination maintain a large “pantry” with give food and clothing [and, in special cases, cash] to thousands. As you must imagine, “business” is pretty brisk these days.)

Aside from a number of other objections, Conservatives are genuinely puzzled why so many Liberals assume health care reform (“doing something”) will just work. Some advocates speak as if government sponsored reform were a magic wand that will “lower the hills and the mountain and make straight the way of the Lord”.

I believe in American Exceptionalism too. But as an empirical matter, there is little reason to believe “universal healthcare” will turn out any differently in the United States than it has in Europe and Canada. I know Liberals find comparisons to European healthcare systems tiresome; but they provide real world studies that cut through a lot of theories and ideologies being thrown around.

Since it inception in the 1960’s, both Republicans and Democrats have talked about getting savings out of Medicare by squeezing out waste and fraud or some other “tidying up the ship”. Never happens. Somehow those savings never show up.

Having been on the inside of Medicare dealings with hospitals and other medical facilities, the government negotiates nothing. They tell you how much they will pay and that’s that. It’s been this way for years. Payment is often pennies on the dollar. Guess who picks up the balance. Guess what happens when there is no one to pick up the balance.

It is amazing how the yearly income government gnomes define as “rich” keeps drifting downward when push comes to shove.

I know you don’t claim to be an economist; but I would familiarize myself with what is called “third-party effects”. In a simplified form, there are a least two phenomena which following when someone other than the recipient of goods or services pays. 1.) When A pays B for services to C, B becomes more compelled to please A than C. 2.) With sufficient time, B will work to convince A to approve services and programs B would prefer to provide rather than what C wants—B will succeed in this “sell” far more often than one would think. Thus it is little wonder why “single payer” systems turn out as they do.

The differences between Liberals and Conservatives on healthcare derive in part from their general sensibilities. Conservatives see healthcare the same as so much in this imperfect world: a limited and scarce resource. Until the last half century, the natural condition of mankind was living in poverty, dirt and sickness. Climbing out of that crippling curse was/is a long and torturous haul. Healthcare simply isn’t something we can grant to ourselves. It would be a positive good for everyone to have healthcare; but such is a goal we must work towards.

Liberals, on the other hand, look upon the suffering and misery of the world and think it is unfair and unconscionable that some get medical care and some do not. Conservatives would agree but not in the same sense Liberals mean it. Liberals tend to view the lack of healthcare a social insult to the personal dignity of each of the uninsured. Especially in recent years, Liberals have pronounced that healthcare is not merely a goal but a civil right. That is, it is appropriate the unfortunate among us to require and expect services and materials for their healthcare needs from the rest of the community. Some in the leadership of the churches pronounce that the failure of any community to provide such a right is “sinful”.

But is turning “wants” or goals into “rights” an answer likely to be successful? Does the insistence in this equality damage at the cost of essential liberty? My guess is that the Liberal would answer “yes” to the first and “no” to the second. The Conservative would certainly answer in the reverse.

Kate| 8.12.09 @ 2:35AM

Drop by. Nice Blog.

Isagenix Challenge| 5.23.11 @ 7:37AM

Trying to the General Welfare clause in the constitution is a complete farce in the justification for justifying to force anyone to buy any type of product especially from a particular source. I hope and pray that this law gets over turned for my sake and the sake of my kids and their kids.

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More Blog Posts by Philip Klein

http://spectator.org/blog/2009/08/03/why-health-insurance-mandates

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