Health Care and Spreading the Wealth Around
The Wall Street Journal has an excellent editorial this morning that examines Dr. Donald Berwick’s famous speech that “any health care funding plan that is just…must re-distribute wealth” and attempts to quantify who will pay for the health care law just enacted. The piece cites an interesting Tax Foundation study from this April, which found that the law will shift over $100 billion from the upper half of the income spectrum to the lower half in a single year. The Tax Foundation also reports that “income will be redistributed not mostly to the lowest income group, but to the lower-middle income groups.” Most individuals in the lowest income group are already eligible for subsidized health care – and it’s also worth pointing out that many lower-middle income people will be relegated to Medicaid programs that have been plagued by delays in access to care thanks to low reimbursement levels.
The Tax Foundation study notes that “many middle income groups would also be slight benefactors of the bill if not for corporate tax increases and the fees imposed on insurance companies, drug makers, and medical device manufacturers.” In other words, as the Congressional Budget Office noted, middle-class families will pay for this “reform” through taxes that will be passed on in the form of higher premiums. That is of course a direct violation of candidate Obama’s “firm pledge” that “no family making less than $250,000 a year will see any form of tax increase.”
Those celebrating the law’s income redistribution fail to recognize that the tax increases financing this transfer of wealth come in no small measure from the individuals and businesses needed to generate additional wealth and prosperity – and taxing those individuals effectively taxes that future prosperity. That is why the Congressional Budget Office found that employer mandates to provide coverage “could reduce the hiring of low-wage workers,” and could also lead to wage stagnation. To use the old metaphor, the new health care law focuses largely on shifting slices of the wealth pie from one income group to another – but in so doing, ensures that the entire pie will not grow, leaving us all poorer in the process.