On Wednesday the GOP introduced its own health care proposal, in the form of an amendment to H.R. 3962, the Affordable Health Care for America Act, introduced October 29, 2009 by the Democratic leadership. (The link is to Rep. Louise Slaughter's statement re the bill--you can download the full text from the link, but it may choke your Internet connection & freeze your computer, as it did mine.) Here is the Congressional Budget Office analysis of the GOP substitute. It is projected to cost $61 billion over 10 years, perhaps 1/16th of the Democratic bill and perhaps 1/25th of what the Democratic bill would cost if promised savings do not materialize--such as $400B - $500B Medicare cuts.
Add to the cost of PelosiCare that her bill contains provisions partially repealing the indexation of tax rates on dividends & capital gains, a protection against inflation that has survived more than 20 years. The WSJ editors supply details--in a piece that should be read in full:
The Pelosi-Obama health tax surcharge will have a similar effect. The tax would begin in 2011 on income above $500,000 for singles and $1 million for joint filers. Assuming a 4% annual inflation rate over the next decade, that $500,000 for an individual tax filer would hit families with the inflation-adjusted equivalent of an income of about $335,000 by 2020. After 20 years without indexing, the surcharge threshold would be roughly $250,000.
And by the way, this surcharge has also been sneakily written to apply to modified adjusted gross income, which means it applies to both capital gains and dividends that are taxed at lower rates. So the capital gains tax rate that is now 15% would increase in 2011 to 25.4% with the surcharge and repeal of the Bush tax rates. The tax rate on dividends would rise to 45% from 15% (5.4% plus the pre-Bush rate of 39.6%).
As for the business payroll penalty, it is imposed on a sliding scale beginning at a 2% rate for firms with payrolls of $500,000 and rising to 8% on firms with payrolls above $750,000. But those amounts are also not indexed for inflation, so again assuming a 4% average inflation rate in 10 years this range would hit payrolls between $335,000 and $510,000 in today's dollars. Note that in pitching this "pay or play" tax today, Democrats claim that most small businesses would be exempt. But because it isn't indexed, this tax will whack more and more businesses every year. The sales pitch is pure deception.
Broadly speaking the GOP alternative to the Democrats' 2000-page monstrosity focuses on tort reform, insurance reform--federalizing regulation to eliminate state impediments--cafeteria choice akin to the plan Congress enjoys, all at a cost that is a fraction of the Democratic proposals. The major concession to fiscal reality is not mandating universal coverage--which youths do not need, save for catastrophic care. Rep. John Shadegg (R-AZ) details how state regulations mandating dubious benefit coverage push up health insurance costs.
SPECIAL 9:30 AM ADDITION: FRIDAY'S ANNOUNCED UNEMPLOYMENT RATE OF 10.2 PERCENT IS THE HIGHEST SINCE 1983. THIS WILL NOT HELP NANCY PELOSI IN ROUNDING UP WAVERING DEMOCRATS FOR SATURDAY'S VOTE ON THE HOUSE DEMOCRAT HEALTH CARE BILL.
Bottom Line. The GOP plan is far better, in that it is affordable, choice-friendly (N.B., many youths are uninsured by choice) and targets lawyers, whose tort suits comprise as much as one-tenth of the nation's $2.5 TR annual health care bill. The bill cannot pass a Democratic Congress, let alone would 44 sign it. What it can do is set up a debate for 2010.
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