Who'll Pay for Health Care Reform?

Eric Schurenberg: I’m Eric Schurenberg, editor-in-chief. Jill Schlesinger: And I’m Jill Schlesinger, editor-at-large. Eric Schurenberg: In today’s reality check, as the president signs healthcare reform into law, it’s time to discuss who was really going to wind up footing the bill. All right Jill, we’re now committed to $940 billion healthcare reform bill. All that’s left is to figure out how we’re going to pay for it. Where does it even start? Jill Schlesinger: Well, I think the big chunk is something like $500 billion in cuts to Medicare and Medicaid. So, that’s the lion share of it. Now, we have the other part which is we get to spank the companies that we’ve always thought were the bad guys. Now of course, if you work for those companies, ignore this part. But those would be again the device makers and the insurance companies, and there’s going to be billions gained through that process. There’s the little tax you have on individuals who don’t get coverage, on businesses who don’t provide coverage -- oh and Eric, did I tell you about the tax increase? Eric Schurenberg: Oh no! There’s a tax increase? Jill Schlesinger: Yes! For you and your wealthy friends, that’s anyone who makes $200,000.00 a year as an individual or more than $250,000.00 as a couple. Two ways the government is going to get some more money. One is an increase in your FICA withholding, about nine- tenths of a percent and then here is something that’s wild, another 3.8% tax on unearned income, interest and dividend income. What’s interesting to me is how that might get expanded to other types of investors or other people who don’t make $200,000.00 or $250,000.00. Do you think that’s a possibility? Eric Schurenberg: I think anything is a possibility. I think that a lot of those revenue numbers sound kind of fishy to me. For example, how much money are you going to raise from companies that don’t provide the required insurance when the companies could easily avoid that tax by providing it or by setting people out into the exchanges? I’m also curious to about what’s the point of taxing capital? An extra 3.8% tax on dividends and interest makes municipal bonds very interesting, makes Roth IRAs very interesting and any kind of tax-deferred account look a lot better. Jill Schlesinger: You know Eric, another thing that’s sort of perplexing -- and this whole thing is perplexing, is the idea of how they’re taxing Cadillac plans. Now, this seems like a very smart idea. In other words, we’re going to tax people who provide too much in healthcare. It really changed behavior, right? But because of the union power, that doesn’t kick in until 2018. God knows what kind of lobbying is going to go on between now and then before those rules take effect. I'm worried that that’s the one area where we really were going to be able to make some substantive changes about how consumers use their health insurance and yet it gets watered down on the end. Eric Schurenberg: Now, that is interesting. And a 40% tax just means it’s not a way of raising money; it’s a way of stopping that kind of plan from happening. At the same time, by adding in all these requirements, these minimal insurance requirements means that every plan becomes sort of a mini Cadillac plan. And so, for a 20-year-old in good health, the opportunity by a high-deductible, minimal coverage, catastrophic care policy just doesn’t really exist anymore. The lack of choice is a bothersome thing to me. Jill Schlesinger: And the last thing that I think that we should probably point out is that the bill as it was originally conceived is not something that’s going to stop healthcare cost from exploding. That’s sort of the shame. We’ve gone through this amazingly arduous process and at the end of the day, have we done anything to really contain healthcare cost in the future? I’m not so sure and I’m worried about that. Eric Schurenberg: That is the absolute biggest question. I mean, the reason to do this is because it might be the first step down the long road of getting healthcare cost under control. And I would say that to take the optimistic point of view as I’d like to do to having conversations with you, is that you can’t really get healthcare cost under control until you have most people covered. You have the ability to have as insurance works, to have the healthy subsidized bezique. That’s the way health insurance works. That’s possible now under this bill. And so, that minimal condition is now met and maybe now, we can get serious about controlling healthcare costs. But we’ll have to see. And that’s your reality check. Thanks for watching.