Miracle-Gro Economics

Member Group : Reflections

Under the pretext of ‘equalizing burdens’ and preventing ‘salary
discrimination,’ Obamacare mandates that insurance premiums must be based on the policyholder’s income level — forget the objective value of the services
covered or the health liability of the individual insured," reports Richard
Ralston, executive director of Americans for Free Choice in Medicine. "But
since the actuarial nature of insurance and the realities of long-term cost
management cannot be ignored, the effect is that those with above-average
incomes will be subjected to inflated premiums relative to costs."

In other words, ObamaCare is just another way for President Obama to
achieve his goal of redistributing income and wealth. As candidate Obama,
seeking to justify his redistributionist proposals for higher levels of
government confiscation of higher incomes, made clear in 2008 to plumber Joe
Wurzelbacher, "I think when you spread the wealth around, it’s good for everyone."

It’s the Miracle-Gro philosophy of economics. It views individual incomes
as fertilizer, something for politicians to toss around in an attempt to
make sure that all the flowers are adequately blooming and sufficiently

"Politicians, most of whom love anything that expands the reach of
government and their own power, are drawn even more to the creation and
manipulation of a political spoils system that allows them to pay off their friends and punish their enemies," writes Ralston. "To that end, much political debate in recent years injects egalitarian ideology into the discussion. For example, Barack Obama, in his candidacy, advocated an increase in the capital gains tax even though such hikes suppress economic activity due to reduced capital investment, and decrease revenue to the government. He said he supported the increase anyway — because it would make taxes more ‘fair.’"
The line of attack for full government control in health care was built on
a strategy of Obama demonizing "the rich" as greedy for wanting to keep at
least half of their earnings, while portraying medical professionals as
ravenous butchers who would rather cut the feet off diabetics than provide
advice on less profitable dietary solutions.

Regarding ObamaCare’s redistribution aspects, Paul Winfree, senior policy
analyst at The Heritage Foundation, highlighted the specifics in his recent
analysis, "Obamacare Tax Subsidies: Bigger Deficits, Fewer Taxpayers,
Damaged Economy."

"Obamacare’s tax subsidies are available for certain households who
purchase federally approved coverage in the newly created health insurance
exchanges unless they are eligible for Medicare or Medicaid or they can receive coverage through their employer that meets standards established by
Obamacare," explains Winfree.

"The tax subsidy is structured to cap the percentage of family income that
these households pay for health insurance. The percentage is based on a
sliding scale, so the subsidy decreases as household income rises. Households
at 133 percent of the federal poverty level will receive a tax subsidy
that limits their out-of-pocket premium to three percent of gross income.
Households between 300 percent and 400 percent of the federal poverty level
will receive a tax subsidy that limits their premium contribution to 9.5
percent of household income."

In short, for the same medical coverage, some households will have to pay
a percentage of their gross incomes that’s more than three times what
households with lower incomes will have to pay.

Ineligible for any subsidy, households with incomes higher than four times
the federal poverty level will have to pay whatever price the government

What’s next? Higher prices for bananas for those in the oft-targeted group
of "millionaires and billionaires"? Triple turnpike tolls if you’re
driving a new BMW?

Ralph R. Reiland is an associate professor of economics and the B. Kenneth
Simon professor of free enterprise at Robert Morris University in

Ralph R. Reiland

Phone: 412-527-2199
E-mail: [email protected]