When it becomes law, families will save on their premiums,” President Obama declared in his weekly radio address before Christmas, pitching his health care reform.                                      If only that were so. Nobody who tracks health insurance sees any sign of softening premium prices for people who already have insurance, Obamacare or not. Premiums for 2010 were up 10% and are predicted to keep growing at the same rate in coming years.Health insurance is beginning to resemble air travel–where deep-pocketed business passengers subsidize penny-pinching vacationers. Insurance companies, under the measures in Congress, would be forced to take all comers, young and old, healthy and sick. Over ten years they would confront $871 billion in spending on uninsured and newly subsidized customers, costs that would be passed along to the young and healthy. The federal government isn’t going to pick up all of that tab. So those now insured through a private plan at work or one bought individually will have to chip in.

If you’re thinking the legislation will tamp down overall health care spending, reconsider. Policy analysts ranging from the neutral Congressional Budget Office to the HMO lobby see no abatement in the growth rate of health care spending. That sector of the economy is growing at a 7.4% annual rate, says actuarial firm Milliman. Medicare’s chief actuary, Richard Foster, thinks that the Senate bill would expand health spending by $234 billion above current projections.

The premium hikes will result from cost shifting, better known as passing the buck. The House and Senate insurance bills aim to cover their costs in part by cutting annual Medicare reimbursements to hospitals, doctors and drug companies by $45 billion. Those providers will likely try to offset the cuts by negotiating higher rates with private HMOs–which then get passed along through higher premiums. That’s exactly what occurred after past Medicare and Medicaid cuts, according to the CBO analysis. Families USA, a nonprofit group advocating expanded federal involvement in health care, says insured families are already absorbing $1,000 a year in costs shifted away from uninsured patients.

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Higher Taxes on Top Earning Americans
Senator Obama is a big believer in our progressive tax system – and he is not afraid to hide that. So one of the first things Obama is set to do is letting President Bush’s 2001 and 2003 tax cuts to selectively expire. He also advocates increasing the income cap on payroll taxes. This would essentially be a huge tax increase for taxpayers earning between $97,000.00 and $250,000.00, which goes against Obama’s prior commitment to not raise taxes on individuals making less than $250,000.00. Although higher taxes on the rich is a popular thought for many liberals, you cannot expect to only tax the rich and cut taxes for the poor. The American public is not likely to support unbalanced tax increases and this could harm his chances in the general election.

Close Corporate Loop-Holes
Another major component of Obama’s tax plan is to close hundreds of corporate “loop-holes” that allow massive corporations to questionably reduce their tax liability. “Instead of having all of us pay our fair share, we’ve got over $1 trillion worth of loopholes in the corporate tax code,” he claimed. “This isn’t the invisible hand of the market at work. It’s the successful work of special interests.” This plan would be highly efficient at creating new revenue for the federal government, but at what cost? Huge corporations are already moving factories and offices to countries with cheaper labor and more favorable corporate taxes. If the tax rates increase too much, then more corporations would likely move out of the country and it could result in thousands of lost jobs.

Senior Citizen Tax Breaks
Although it seems like an attempt to get the attention of the “senior voters” and the AARP, Obama is hoping to provide relief to millions of seniors struggling to make ends meet. His plan would eliminate federal taxes on seniors making less then $50,000.00 per year, which would account for $7 million dollars in total relief. It seems quite unlikely that the country would get behind this tax plan. I also have my own reservations – what about single mothers making less than $50,000 per year – that I expressed in a previous entry.

Make Work Pay Tax Credit
With his Make Work Pay tax credit, Obama is hoping to encourage Americans to take control of their lives, while providing tax relief to both low and middle income taxes. “I’d reward work by providing an income tax cut of up to $500 per person – or $1,000 for each working family – to offset the payroll tax that they’re already paying,” claimed Obama. “Because this credit would be greater than their income tax bill, my proposal would effectively eliminate all income taxes for 10 million working Americans.”

Capital Gain Tax Increase
Obama’s desire to increase the Capital Gains rate is probably the biggest actual increase of his tax plan. The current tax rate on Capital Gains is 15%, and Obama hopes to raise it to 28%. But although the Capital Gains tax rate is much lower today than it was a decade ago, it is being levied on a lot more people. Investing is not only for the rich, as there are millions of middle income Americans investing in stocks, retirement accounts, and mutual funds. In a time of a looming economic recession, we should be encouraging sound investment and savings strategies. Raising the capital gains rate is not going to do that.

Mortgage Relief for Homeowners
“Ten of the country’s largest mortgage lenders spent $185 million lobbying Washington so they could keep engaging in destructive practices,” claimed Obama. “And they got what they paid for. To help fix this problem Obama wants to create more accountability in the mortgage industry. In addition, he intends to pursue more tax breaks for current homeowners. Specifically, Obama announced intentions to “create a 10 percent universal mortgage credit to provide homeowners who do not itemize tax relief.”

Because it is a credit, individuals claiming the standard deduction would have access to it. Currently, mortgage interest is a deduction that can only be claimed by itemizing your deductions on your tax return. The credit would provide about $500 to 10 million homeowners in this country, mainly for individuals making less than $50,000 per year.

Revamp the AMT
Although Obama voted “nay” on repealing the Alternative Minimum Tax (AMT), he does support a revamp of the tax. The specific details of his plan are a bit hazy, but Obama has claimed he would like to index the tax according to inflation so that it does not affect middle-income Americans. However, with dozens of social plans that cost billions of dollars to operate, the idea of reducing a tax that generates so much revenue for the government seems unlikely.

American Opportunity Tax Credit
One of Obama’s more popular tax views is to help make higher education more affordable for Americans by creating a credit to reimburse taxpayers for the costs of obtaining a college education. According to his plan, the credit would reimburse taxpayers on the first $4,000.00 they spend on a college education, and will cover two-thirds of the cost of attending a public college or university.

Immigration Reform and Undocumented Immigrant Taxes
Obama wants to reform the way the federal government deals with undocumented immigrants. Obama’s plan does have tax consequences, as it would not only require illegal aliens to file tax returns and pay income taxes, but would also require them to pay back taxes and the associated penalties and interest. If this idea became reality, it could account for millions of dollars in additional federal revenue. And, by not including tax amnesty in his immigration reform, Obama preemptively “plucks” a feather from the anti-immigration reform movement. It also preemptively stops American citizens from lobbying for similar treatment for their own unfiled tax returns and IRS back taxes.

1. Mortgage Crisis

Obama
The ongoing mortgage crisis is a problem that is affecting more and more American families every day. To help protect home ownership and fight mortgage fraud, Obama has presented a multi-tiered plan designed to help families facing foreclosure and also monitor the mortgage industry better to avoid future problems.

Obama supports the Stop Fraud Act that provides a definition of mortgage fraud and rules and regulations to help stop the problem. The act also requires the Government Accountability Office to evaluate lending practices and report their findings to congress.

The final component of Obama’s mortgage relief plan is to create a universal mortgage credit. Currently, the United States tax code only encourages families to purchase a home with a tax deduction. However, it is currently only available to taxpayers that itemize their returns. This leaves out about 2/3 of Americans who elect to take the standard deduction. Obama would like to create a universal mortgage credit that he claims will benefit an additional 10 million homeowners.

McCain
Senator McCain also has is own take on the mortgage crisis. His plan is called the new “Home Plan,” which aims to provide help to those hurt by the housing crisis. McCain claims that his plan will allow every deserving homeowner the opportunity to trade in a burdensome mortgage for a more manageable one that will reflect his or her home’s current value.

However, exactly “who” is deserving? According to McCain’s website, eligible individuals include those Americans that hold a non-conventional mortgage taken after 2005. The house will need to serve as the home owner’s primary place of residence and he or she will need to be able prove they cannot meet current payments, but would be able to comply with a new 30 year fixed rate mortgage.

The Difference
Although Obama’s plan seems more substantive than McCain’s, they both attempt to help solve the countries mortgage problem. However, as with many other issues Obama’s seems to target lower income families namely those that do not itemize which typically correlates to families that make under $50,000. I think it is also interesting to note that they both propose the creation of a government agency to monitor the mortgage industry, but they propose them for different branches of the government.

2. Lower Income Americans

Obama
Sen. Obama’s tax plan seems in line with his redistribution of wealth ideals. His economic plans surround the idea of giving every lower-income American an opportunity to better themselves. The centerpiece is his “Make Work Pay” tax credit that would encourage Americans to take control of their lives, while providing tax relief to both low and middle income taxes. The credit would offset federal taxes on the first $8,100 of a taxpayers earnings and would essentially generate a credit of up to $500 for single persons or $1,000 per family. According to Obama, this credit would eliminate income taxes for at least 10 million low-income Americans.

Another of Obama’s more popular tax views is to help make higher education more affordable. He would do this through creating a credit to reimburse taxpayers for the costs of obtaining a college education. According to his plan, the credit would reimburse taxpayers on the first $4,000 they spend on a college education. Obama’s campaign claims that it will cover two-thirds of the cost of attending a public college or university.

McCain
As with most Republicans, McCain’s tax plan is more geared to middle and upper income Americans. However, one major component of his campaign has been “Immediate Help for American Families.” In this plan, he claims to target policies that will provide relief to American taxpayers facing rising gas and food prices and record foreclosures. However, it is unclear how McCain’s actual proposals will do that. Specifically, McCain target opaque issues like corn and sugar subsidies, trade barriers, and the Strategic Petroleum Reserve (SPR). While we all know that nothing happens over night, it is even more unclear how these changes in these policies will immediately help the American taxpayer as McCain claims.

One of the tax cuts McCain supports is raising the personal exemption for dependents from $3,500 to $7,000. This would help any working taxpayer with dependents they have to provide for, regardless of income level.

The Difference
Obama’s tax plan is much more favorable to lower income Americans than McCain’s. He supports programs like the “Make Work Pay” credit that will not only help lower income Americans, but also encourage them to work. It is also interesting to note that both candidates support tax credits designed to help families or anyone taking care of dependents.

3. Higher Income Americans

Obama
Senator Obama is a big believer in our progressive tax system – and he is not afraid to hide that. So one of the first things Obama is set to do is letting President Bush’s 2001 and 2003 tax cuts to selectively expire. By “selectively expire”, Obama endorses extending those tax cuts on the rates for all but the top two income tax brackets. In addition, Obama also advocates increasing the income cap on payroll taxes. This would essentially be a huge tax increase for taxpayers earning between $97,000 and $250,000, which goes against Obama’s prior commitment to not raise taxes on individuals making less than $250,000.

Although Obama voted “nay” on repealing the Alternative Minimum Tax (AMT), he does support a revamp of the tax. The specific details of his plan are a bit hazy, but Obama has claimed he would like to index the tax according to inflation so that it does not affect middle-income Americans.

McCain
McCain is a strong supporter of lowering taxes to encourage economic growth, which is the dominant economic stance of the Republican Party. Not only does he support renewing the Bush tax cuts, but he also favors numerous tax cuts. McCain hopes to reduce taxes on Capital Gains, Interest, Dividend, Investment income, and even corporate tax rates.

McCain is a strong supporter of repealing the Alternative Minimum Tax (AMT), which would be a tax cut for the upper middle income taxpayers. However, if McCain wants this tax fully repealed, then he is going to have to strike a deal with Congress, and it seems highly unlikely that he would get enough support to make this drastic and costly change.

Although McCain had originally voted against the Bush tax cuts, he now claims to support an extension of the plan. “I voted to extend them because it would have the effect of having a tax increase,” claimed McCain when asked about his flip-flop. “The tax cuts have increased revenues enormously. They’ve been very beneficial. The problem is that spending has lurched completely out of control. My proposal was to restrain spending. I do not support tax increases. And the effect of not making them permanent would have the effect of a tax increase.”

The Difference
It is no surprise that McCain’s tax views favor the upper income Americans, as he supports the full extension of President Bush’s tax cut. On the other hand, he does support the repeal of the AMT, which is being levied on more of middle income Americans each year. Although Obama does support other tax breaks for the middle class, he does not want to repeal the AMT.

4. Capital Gains

Obama
One of the more controversial aspects of Obama’s tax proposal is his hope to nearly double the taxes levied on Capital Gains. The current tax rate on Capital Gains is 15%, and Obama hopes to raise it to 28%. “At a time when Americans are working harder than ever, we are taxing income from work at nearly twice the level that we’re taxing gains for investors,” Obama claims. “We’ve lost the balance between work and wealth.”

When questioned about his plan’s to nearly double the rate, Obama claims that he wants to raise the tax for fairness, not for revenue. One of his arguments is that the top 50 hedge fund managers made $29 billion last year, but paid lower tax rates then their secretaries did. Obama wants to restore the rate back to what it was in the Clinton era. Although the rate is much lower today than it was a decade ago, it is being levied on a lot more people. Investing is not only for the rich any more – millions of middle income America invests in stocks, retirement accounts, and mutual funds.

Additionally, Obama also fails to mention that the 28% Capital Gains rate was dropped to 20% during President Clinton’s time in office and studies show that the federal government’s revenue from Capital Gains actually increased. Then, when President Bush dropped the rate down to 15% the revenue increased yet again.

McCain
McCain plans to keep the current Capital Gains tax rates. He claims that since these taxes are voluntary, they should not be taxes as ordinary income. In order to make a profit, someone must sell a stock. Further taxes could distort decision-making, increase the use of tax shelters, and even lower the federal government’s revenue. Additionally, McCain claims that this tax policy actually helps lower income Americans, as half of all capital gains end up benefiting persons earning less than $50,000 a year.

The Difference
The differences between McCain’s and Obama’s views on Capital Gains are quite simple. Obama favors doubling the tax rate and McCain wants to keep it at current levels. Although it may seem unfair for Capital Gains to be taxed at lower rates than income, there is some evidence that supports the belief that it encourages economic growth. The federal government’s revenue from Capital Gains has increased since the rate was lowered. You cannot argue against facts. Finally, raising a tax for fairness and not for revenue is not a sound economic policy.

MARCH 26, 2010

This Week in Health Care Reform     

Health care reform legislation passed the House this week on a party-line vote. Late Sunday night, House Democrats approved the Senate health care reform package, sending the legislation to President Obama for his signature. On Tuesday, President Obama signed the underlying bill into law, yet the House has yet to finalize the package of “fixes” that will alter the final implications of the legislation.

Health Care Reform Negotiations

House Democrats Pass Health Care Reform Package: The House of Representatives approved the Senate health care reform bill Sunday night by a vote of 219 to 212. The vote marks the climactic finale to a year-long debate over health care reform. In the final vote, 34 Democrats joined all House Republicans in voting against the measure. Shortly thereafter, the House also passed a package of “fixes,” by a vote of 220-211, that was sent directly to the Senate for its approval through reconciliation. On Tuesday, President Obama signed into law the Senate health care reform bill, called the “Patient Protection and Affordable Care Act.”

Republicans Force Senate to Send the Reconciliation Bill Back to the House: Shortly after the President signed the Senate bill into law, Senators began deliberations on the reconciliation bill. Reconciliation protocol restricts Senators to 20 hours of debate on the measure, but it does not limit the number of amendments that can be filed. In an expression of opposition to the bill, Republicans filed 29 amendments to the reconciliation package.

After 10 hours of continuous debate, Republicans were successful in eliminating two provisions related to college financial aid in the non-health care portion of the bill. The Senate parliamentarian ruled early Thursday morning that those two provisions violated the chamber’s rules, sending the legislation back to the House for a new vote. As a result, on Thursday afternoon, the Senate voted on the reconciliation bill without those two provisions and sent the bill  back to the House for a vote on final passage. The House vote will likely come Thursday evening.

What Does This Health Care Reform Legislation Mean: While the health care reform bill extends insurance coverage to 32 million more Americans by 2019, the legislation has other far-reaching implications that will be phased in sooner, during a multi-year implementation period.

Several features of the new health care overhaul bill that would take effect in 2010 under the measure passed Sunday include:

* New product requirements beginning 6 months after enactment, including:
o Coverage for dependents up to age 26
o No lifetime maximum benefit limits
o And no cost sharing on preventive care for certain policyholders
* Temporary federal high risk pools;
* Tax credits for small employers; and
* Prohibition on pre-existing condition exclusions for children (beginning 6 months after enactment).

Most Americans will have until 2014 to purchase insurance or pay a penalty. Other elements of the bill that will not take effect until at least 2014 include insurance marketplaces called “exchanges”; rules requiring insurers to accept all applicants regardless of pre-existing conditions, and an expansion of state Medicaid programs.

A number of experts question whether health care reform will really drive down insurance premiums. America’s Health Insurance Plans ( AHIP), the trade group representing health insurers, outlines a series of concerns related to the legislation including a lack of provisions that address underlying health care costs, improve quality of care or ensure a stable risk pool. In addition, AHIP expressed concerns regarding new taxes on health coverage, which will likely increase premiums.

Additional Activities

Obama’s Executive Order on Abortion Funding: On Sunday afternoon, prior to the final House vote on health care reform, President Obama agreed to issue an Executive Order that would uphold the ban on federal funding for abortion . In so doing, he secured about a half-dozen votes from anti-abortion Democrats, led by Rep. Bart Stupak (D-MI), who previously opposed the legislation. On Wednesday, President Obama signed the Executive Order banning the government from spending federal money to pay for abortions through plans offered on the insurance exchanges created under the measure.

States Filing Lawsuit to Fight Provision of Health Care Reform Bill: In response to the new health care reform legislation, states across the country have filed lawsuits asking the courts to declare the law unconstitutional and to bar its enforcement. On Monday,Attorneys General in 13 states, led by Florida, filed a joint lawsuit claiming that the new health care reforms violate state government rights in the U.S. Constitution and will force massive new spending on hard-pressed state governments. Joining Florida in the suit are Alabama, Colorado, Idaho, Louisiana, Michigan, Nebraska, Pennsylvania, South Carolina, South Dakota, Texas, Utah and Washington.

At the same time, the Attorney General in Virginia filed a separate suit contending that Congress has exceeded its power in mandating that people buy health insurance. Virginia Attorney General Ken Cuccinelli argues that the new law’s requirement clashes with Virginia law that exempts citizens from federal fines imposed for not having health insurance.

Senate Voting to Extend COBRA Until May 5:  Senate Democrats plan another short-term extension of unemployment aid this week, setting up a face-off with Republicans, who are vowing to fight the extension if the $10 billion cost isn’t offset with spending cuts. The bill, currently set to expire on April 5, would extend a series of emergency programs – including funding for unemployment insurance benefits and COBRA health coverage for the jobless  – and would hold off a deep cut in reimbursement rates for doctors who serve Medicare patients. The long-term extension has already passed in both the House and Senate, but the two measures are not expected to be reconciled and sent to the President’s desk until after the Easter recess.

President Obama Heads to Iowa to Speak on Health Care: President Obama headed to Iowa on Thursday to increase support for his health care legislation. This was President Obama’sfirst trip out ofWashington since signing health care reform legislation earlier this week. He spoke at the University of Iowa, in the city where he first announced his health care proposal during the Presidential campaign.

Public Opinion

Most Americans Want Republicans to Fight Health Care Reform Bill: In a recent CBS News poll, 62 percent of Americans said they want congressional Republicans to continue challenging the bill, while 33 percent said they should not. Disapproval of the bill has remained steady, with 46 percent saying they disapprove, including 32 percent who “strongly” disapprove. A majority of Americans continue to say that they find the bill to be confusing and do not understand what it means for them or their family.

American’s Split on Health Care Reform Passage: In a recent USA Today/Gallup poll, 42 percent of Americans said they were angry or disappointed with the recent passage of health care reform legislation. When asked to reveal party affiliation, 79 percent identified themselves as Republicans.

Polling Shows Support for State Lawsuits Against Government: National polling reveals significant opposition to the individual mandate. In a newly released Rasmussen report , 53 percent of those polled oppose the new mandate requiring every American to buy or obtain health insurance. Further, 49 percent of voters are in favor of their state suing the federal government to fight the mandate. Fifty-one percent say individual states should have the right to opt out of the health care plan entirely.

Looking Ahead

After this week’s final health care reform vote, President Obama plans to travel the country in the next few months to discuss the new law. Republicans have begun their own discussions of the law, with an eye towards the November elections.

Author Resource. Easy To Insure ME http://www.easytoinsureme.com

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