"The President's Proposal," as the 11-page White House document is headlined, is in one sense a notable achievement: It manages to take the worst of both the House and Senate bills and combine them into something more destructive. It includes more taxes, more subsidies and even less cost control than the Senate bill. And it purports to fix the special-interest favors in the Senate bill not by eliminating them—but by expanding them to everyone.
From Michael Cannon at the Cato Institute:
In a recent paper, I showed that the health care legislation passed by the House and Senate would impose punitive implicit tax rates on low- and middle-income workers. Those bills would also result in higher health insurance premiums over time because they would create large financial incentives for healthy people to drop coverage and only purchase it when they become sick.
The health care proposal that President Obama released yesterday essentially splits the difference on most areas of disagreement between the two bills. But a preliminary analysis shows that ObamaCare 3.0 would make these perverse incentives even worse. Families of four earning $22,000 under the Senate bill (100 percent of the federal poverty level) or $30,000 under the House bill or the Obama plan (133 percent FPL) would face the following effective marginal tax rates as they climb the economic ladder:
- Senate bill – Average: 62 percent. High: 73 percent.
- House bill - Average: 74 percent. High: 82 percent.
- Obama plan – Average: 72 percent. High: 90 percent.
In other words, over broad ranges of income, families of four would see their take-home pay rise by an average of 28 cents of each additional dollar earned. In some cases, it would rise as little as 10 cents for each additional dollar earned. Using smaller changes in income reveals the Obama plan would create EMTRs as large as 200 percent or higher. That is, earning more money would leave many families worse off financially. [emphasis added]
Megan McArdle for the NYTimes:
More broadly, for all that Democrats are declaring that they have a mandate, it’s pretty clear that the public does not want them to pass any of the health care bills on the table — which has to include the Obama plan, since it is only a minor tweak on the existing proposals. Polls have shown more Americans opposing passage than supporting it since early summer, and opposition has risen fairly steadily over time.
While President Obama promised health care reform during the election, the plan he ran on was much different than the one he is hoping to sign into law. Most notably, it contains an individual mandate, which he opposed during his campaign — and which the American public opposes. The individual mandate, along with the hefty price tag, are the two factors that Americans who oppose the legislation are most worried about. [emphasis added]
When Congress required most Americans to obtain health insurance or pay a penalty, Democrats denied that they were creating a new tax. But in court, the Obama administration and its allies now defend the requirement as an exercise of the government’s “power to lay and collect taxes.”… Administration officials say the tax argument is a linchpin of their legal case in defense of the health care overhaul and its individual mandate.
