Health Care Reform Corrects Things

Health Care Reform in 2010 has corrected a few things that, I’m guessing, most Americans did not know existed. Let’s take a look at one item put into law in 2003. At that time, the Bush administration and Republican-led Congress prepared to expand Medicare to include prescription drug coverage.

Nevermind the fact that the legislation did not provide for competitive pricing. A few large corporations that provided prescription drug benefits for their retirees threatened to cut off that benefit since those retirees could take advantage of the proposed Medicare benefit.

So, Congress said, "We’ll give you a subsidy to help you pay for that benefit. Not only will we give you the money, but we’ll allow you to use it as a deduction and get a tax benefit as well."

Think about that. The federal government was giving money to the corporations. When those same corporations spent the money, they could then claim it as a deduction on their taxes just like they had spent their own money.

The recently passed Health Care Reform legislation eliminates that deduction. Corporations will now be paying more taxes since they can no longer "double dip" the subsidy money. Recents announcements about write-downs provide a little insight into how much this ill-advised program was hurting government revenue.

A T & T announced they would be taking a $1 BILLION write off. Caterpillar, the world’s largest maker of bulldozers and excavators, expects to record a charge of about $100 million in the first quarter of 2010, due to new tax liabilities. John Deere is also expecting to write off $85 – $90 million. Verizon is taking a look at how they’ll be affected but hasn’t released any figures yet.

The fact is that the government will receive more tax revenue because of this one correction.

I’m quite sure unemployed workers wish unemployment benefits had worked like that. Yes, they were receiving a subsidy from the government from unemployment insurance that their employers had paid for. But, quite a bit of that income had to be paid for COBRA coverage to continue their health insurance. However, not only did the unemployed have to pay taxes on the amount of their unemployment checks, they could NOT DEDUCT the cost of COBRA coverage unless it exceeded 7.5% of their adjusted gross income and they were able to file itemized deductions on the tax return.

Let me put it this way. I know one person who received an unemployment benefit of $400 per week after losing a $1,000 per week job. (continued below)

Out of that $400 per week, that person had to pay $750 each month for COBRA continuation of health insurance benefits. That didn’t leave very much income for paying bills, eating and things that are a part of everyday life.

Now, that was back in 2008 before President Obama led Congress in providing better relief for unemployed workers. America seems to be taking from the corporations and giving to the people. Is that a bad thing?

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