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Home Front: Politix
The ObamaCare tax hike that loses five times what it brings in ( Bad news for Patty Murray)
2010-03-31
We turn to the Wall Street Journal for the math on what it will cost to raise taxes on corporations' retiree prescription drug coverage. This is the provision that has caused several corporations to take markdowns recently.

The bottom line: by closing this “loophole' — which was originally created to dissuade companies from dumping retirees' prescription costs into Medicare Part D — the government could lose more than five times what it brings in.

The Employee Benefit Research Institute calculates that the 28% subsidy on average will run taxpayers $665 in 2011 and that the tax dispensation is worth $233. The same plan in Medicare costs $1,209. Given that Congress has already committed the original sin of creating a drug entitlement that crowds out private coverage, $233 in corporate tax breaks to avoid spending $1,209 seems like a deal. If one out of four retirees is now moved into Medicare, the public fisc will take on huge new liabilities.

Emphasis mine. Such corporations have four main options: drop or reduce prescription coverage for their retirees, pass new costs along to cash-strapped consumers, lay off workers, or simply bear the tax losses and pass them along to shareholders.

Not good options, are they? As it sucks more and more money out of employers like Caterpillar, John Deere, AK Steel, AT&T, etc., (this provision alone will cause an estimated $14 billion in sudden losses), can we start referring to ObamaCare as the “un-stimulus?'

UPDATE: This particular tax provision will cost Boeing $150 million, the company reports today. Serious bad news for Sen. Patty Murray, D-Wash., who is about to get a serious challenge from perhaps the one man who can beat her.
Posted by:tipper

#2  How's Obamcare lite working in Massachusetts?

The original estimate in 2006 was $84 million, this year it will be over $900 million. They have the highest healthcare costs in the nation, Emergency room visits are up 17%.

In February 2008, the Boston Globe reported that Commonwealth Care covered 169,000 people and had a projected cost of $618 million for the fiscal year. By June 2011 enrollment is projected to grow to 342,000 people at an annual expense of $1.35 billion. The original projections were for the program to ultimately cover approximately 215,000 people at a cost of $725 million. Enrollment in the Commonwealth Care Health Insurance Program reached approximately 170,000 by April 1 of 2008. Enrollment in the Commonwealth Choice Plans, offered through the Commonwealth Health Insurance Connector, was almost 18,000 by the same date. Enrollment in the Commonwealth's Medicaid program, MassHealth, was up by 50,000 by January 2008. Data from the Massachusetts Association of Health plans suggest that enrollment in employer-sponsored health insurance was up by 85,000, but the number of people with individual coverage increased by less than 10,000.

In March 2008, the Boston Globe reported that some "safety-net" hospitals serving low-income individuals in urban areas were facing budget shortfalls due to the combination of reduced "free-care" payments from the state and low enrollment in Commonwealth Care. The reduced state payments anticipated that by reducing the number of uninsured people Commonwealth Care would reduce the amount of charity care provided by hospitals. In a subsequent story that same month the Globe reported that Commonwealth Care faced a short-term funding gap of $100 million and the need to obtain a new three-year funding commitment from the federal government of $1.5 billion. The Globe reported that a number of alternatives were under consideration for raising additional funding, including a $1 per pack increase in the state's cigarette tax. Health care costs in the state were rising at an annual rate of 10%, and the state budget deficit was $1.3 billion.

A paper published to be published in Entrepreneurship Theory and Practice analyzes the impact of Massachusetts approach to health financing reform, insurance mandates, on the rate of new business starts in Massachusetts versus New Hampshire. Along with an earlier dissertation published in April of 2008, it finds that new business starts were reduced in Massachusetts by 16%, and that this reduction included displacement of new firm starts across the state line into New Hampshire.
Posted by: GolfBravoUSMC   2010-03-31 13:10  

#1  I think this pile of legal poo bill will hang around the necks of dhimocrats for a long time. Not to mention that it violates 3-5 of the Bill of Rights amendments.
Posted by: DarthVader   2010-03-31 12:25  

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