Combating the recent anti healthcare propaganda the White House released their own blog post on their website http://www.whitehouse.gov/. America is torn once against in a manner not seen since the Civil Rights Movement of the 1960’s; the issue, healthcare reform. The Republicans have been issuing a propaganda campaign to plays off the fears of the average American who is concerned about the new government healthcare reform. On the other hand the Democrats have not released a simplified version of the bill for the common American to read and understand. As a student of economics planning to pursue a doctorates degree I will take a look at the economics behind the bill, and what it will mean to the average middle class American. This article will be as un-bias as I can possibly write, as I am neither Democrat nor Republican; I want to simply focus on the economic impact this bill with have on your everyday life in a very simplified form.
Will my tax dollars pay for healthcare reform with increased taxes, and is this considered socialism?
Although I am not in a game of politics I can safely say that the economics behind the healthcare reform does not resemble socialism in the least. Basically what is happening is the government wants to regulate the ridiculous earnings of healthcare companies and provide a public alternative to the unemployed (recently laid off workers), persons without healthcare, and for a small business alternative. The socialism debate cannot be won here or even explained with an economics solution, but in basic your taxes will be paying for the reform. Everyone is already federally, which means your tax dollars go towards paying for Medicare, Medicaid, Welfare, and hundreds of other government projects. The healthcare reform will be another government project that the tax dollars will be put towards; therefore the tax increase scare is negligent at best. You will be paying for the reform thru taxes but you will not see a noticeable price hike. The bill is helping everyone but it also serves as a safety net for someone who is recently laid off or unemployed; basically circumstances out of their control.
You have health insurance and you do not want to pay for subpar public option?
Understandably Americans are already paying high premiums for their health insurance and do not want to pay money for a public option that will not benefit them. First off you will not notice increased taxes; the money is spent every year by the government and this would be an additional project that your tax dollars fund. The money spent on healthcare reform will actually be put back into the economy by paying for administrators of the government health care and to the doctors that administer the care. The multiplier effect which is basically when the government collects your taxes, they spend that money which is actually beneficial to the economy with the multiplier effect; for instance if your taxes are $100 and the economic multiplier is 4 then your taxes will have a $400 impact on the economy. You will still be able to keep your old policy but you will have the added insurance in case of a layoff or unemployment.
Secondly why would you want to pay for a public option?
A public option of healthcare is good for two economic reasons; if you lose your job you will be covered thus saving you thousands in healthcare expenses, second it would be a stiff competitor to the health insurance companies. If the insurance companies have a competitor that has almost no overhead costs then they will have to lower costs to compete. You can still keep your insurance company but at a better rate!
Why is everyone saying that their kids will be paying for the healthcare mistake?
The majority of protesters and government officials are not economists, and have little experience with an economics background. Your children will not be paying for the deficit any more than you are paying for government sponsored highways. The deficit which would be further increased by the healthcare reform bill, but will be another government expenditure, which is paid via federal taxes. With the burden of healthcare insurance taken off of small and medium sized companies they will in turn grow and pay out higher wages, which will be taxed (at the current amount), but more will be collected due to higher gross salaries. The argument that you will be taxed more is both true and false; it is true because companies will be able to pay more due to lower healthcare costs, which is taxed and false because you will not see a negative economic impact on your finances.
I heard healthcare reform is actually bad economically to small business, is that true?
The current healthcare system has figuratively raped small business; small business cannot pay the premiums for subpar coverage and even cut back workers hours so that they are not required to offer healthcare. When I worked a student job for a local small hardware store they actually offered 5 less hours for a full time position so that they did not have to offer healthcare. With a public healthcare option small business would not have to pay the high fees that they are paying now, and can in turn offer higher wages and more hours. The people that make minimum wage are statically the ones who live paycheck to paycheck and will stimulate the economy with a higher wage; the opposite is true for a wealthy individual who is more likely to save their money or invest it in a portfolio that solely keeps up with inflation.
Overall will healthcare reform have a negative or positive effect?
Unless you are an executive for a health insurance company then you should not expect much, if any, negative impact. Your taxes will remain at the same rate, the government will be changing their budget plan to meet this bill, and the increased wages will thus draw more taxes into the economy.
Macroeconomics 9th Edition, Robert J Gordon