Who pays for health care reform?

Who pays for Obama’s health care reform plan?  The short answer?  Almost certainly not you.

If I had my choice, we’d pay for health care reform using the money we’re wasting on the war in Iraq or by using money that’s currently going to help us recover from the excesses of the financial sector.  Too bad those aren’t viable options.

Instead, President Obama has proposed that we fund the health care reform plan by rolling back the recent tax cuts for the wealthiest Americans.  Initially the target was people who make more than $250,000 per year.  The House is currently looking at raising taxes for people who make more than $350,000 (or $280,000 if you’re single).

Even if we use the lower number, only 2% of the US is making as much as $250,000 a year.  So 98% or more of us will not see any impact on our taxes.

Here’s a chart of income distribution from through 2007:

2007 income

The chart shows that most of us make nowhere near $250,000.  Actually, fewer than 20% of us are within $100,000 of that amount, so there’s probably no danger of your next raise pushing you over the limit.  Another way to look at it:  If you did happen to make $240,000, would you refuse a $20,000 raise just because you would pay a few dollars more in taxes?  Of course not.

If you are one of the 2% who does make over $250,000, good for you! Can’t you afford a few bucks to help your less fortunate compatriots?  $250,000 a year may not buy you everything you want, but unless you’ve made some incredibly bad choices, you’ve got more than enough to stay fed and keep a roof over your head and still enjoy life.  Why does money for reform have to come out of your pocket?  The same reason Jesse James robbed banks – “because that’s where the money is.”

Health care reform has two goals.  We want to end up saving money overall, even with tax increases, by reducing the overall cost of health care or at least reducing the rate of increase in health care expenses.  And we want to improve the quality of health care coverage by ensuring that good care is available for everyone.   Those are hard problems to solve.  Worry about that first. Compared with coming up with a successful reform plan, figuring out a way to pay for it is easy.

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