Freshman North Carolina Sen. Kay Hagan has walked away from her campaign promise of governing as a fiscally responsible moderate who would protect the middle class from higher taxes.
By joining 57 other Democrats and two putative independents to pass the health care bill, she has OK’d more than $500 billion in tax hikes and tens of billions more in deficit spending. Republican staffers at the Senate Finance Committee have concluded that a significant amount of those tax increases would hit middle-class Americans.
Based on estimates from the Joint Committee on Taxation and the Congressional Budget Office, here are some of the ways Uncle Sam would reach into your pockets:
• A 40-percent excise tax on high-dollar, “Cadillac” medical insurance plans offered in many union contracts. This tax would hit any employer paying more than $8,500 in premiums for individuals or $23,000 for their families. It is expected to raise $149 billion over the next decade.
• Yearly fines against employers ($750) and individuals (between $495 and $1,485) if they refuse to buy federally approved health insurance — the so-called mandates. Low-income workers and their bosses would be hit hard by these fines, which could raise $43 billion.
• FSA caps. Employers can now let workers withdraw unlimited amounts of pre-tax money to pay out-of-pocket medical expenses. The Senate bill limits FSAs to $2,500 a year. The cap would hike taxes $13 billion on workers with high medical bills.
• Itemized deduction limit increase. Taxpayers can now deduct all out-of-pocket medical expenses that exceed 7.5 percent of gross income. The Senate bill raises the threshold to 10 percent of gross income. It’s a $21.7-billion tax hike that would hit the middle class disproportionately.
• Fees on insurance providers, drug makers, and medical device manufacturers. CBO Director Douglas Elmendorf said in November these new fees, totaling $101 billion, “would be largely passed through to consumers in the form of higher premiums for private coverage.”
Moreover, the bill would add 15 million Americans to the Medicaid rolls. GOP Sen. Richard Burr says this would cost North Carolina taxpayers an extra $800 million annually after a five-year program of temporary subsidies from Washington ends.
Finally, the bill would pile hundreds of billions of dollars of debt on future generations. Democrats promised $170 billion in deficit reduction over the next decade. Part of the presumed savings would result from a timing gimmick: The government would start collecting new taxes and fees immediately but wait four years to pay benefits.
The “savings” also rely on cutting Medicare fees to doctors by 20 percent and never increasing them. The feds have never imposed such cuts, and there’s no reason to believe they will.
Senators stayed in Washington through a late December blizzard to give President Obama this freedom-killing Christmas present. Here’s hoping constituents greeted returning senators with a resounding “Humbug!” Washington should take a different approach — putting consumers and patients in charge of their health care.