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Health Insurance Reform - DAILY MYTHBUSTER: Inaccurate Comments of Republican Leaders

Health Insurance Reform Daily Mythbuster: Inaccurate Comments of Republican Leaders

Health insurance reform opponents, such as Congressman Mike Pence of Indiana and House Republican Leader John Boehner of Ohio continue to spread myths about America's Affordable Health Choices Act's impact on taxes and small businesses. The facts about health insurance reform disprove their comments.

Myth: “…The reality is that we're looking at the launch of a more than $1 trillion government health care initiative by the Democrats. It's gonna be paid for by nearly a trillion dollars in higher taxes on small business, on individuals…” - Congressman Mike Pence (R-IN) [7/30/2009]

Fact: There are NOT “nearly a trillion dollars in higher taxes” in the House bill.  About half of the $1 trillion cost of the America's Affordable Health Choices Act is paid for through cost savings through significant efficiencies and savings in Medicare and Medicaid and only the other half is paid for through a surcharge on some of the income of the wealthiest 1.2 percent of Americans.

  • Roughly half of the $1 trillion cost of the health care reform bill is paid for by achieving significant efficiencies and savings in Medicare and Medicaid - in other words, reallocating U.S. taxpayer dollars already being spent on health care to achieving more efficiency, higher quality, and broader coverage.
  • Examples of the savings achieved are $156 billion in savings by eliminating overpayments to private Medicare Advantage plans over 10 years and $102 billion in savings by incorporating productivity adjustments into Medicare payment updates to hospitals.
  • Under this bill, middle-class Americans will not see any tax increases. Specifically, under the proposal, all families with adjusted gross incomes below $350,000 and all individuals with adjusted gross incomes below $280,000 will not pay the “health care surcharge.”
  • According to the nonpartisan Joint Committee on Taxation, only the top 1.2 percent of wealthiest Americans will pay the “health care surcharge.' These top earners received a disproportionate share of the tax cuts over the last decade and also saw a large jump in their income and overall wealth.
  • Furthermore, according to the nonpartisan Joint Committee on Taxation, 96 percent of America's small business owners would see NO tax increases under this proposal.
  • Only 4.1 percent of all small business owners would pay the surcharge, using the broadest definition of a small business owner. Of those, half earn less than one-third of their income from small businesses - not what we think of as truly “small business owners.”
  • Among the “small business owners” paying the surcharge are hedge fund managers, private equity managers, lawyers, and lobbyists making millions of dollars a year.

Myth: “… the Democrats' bill actually creates a climate that destroys jobs and does nothing to slow the cost-shifting to businesses... At the heart of the Democrats' plan are an income tax surcharge that will fall heavily on entrepreneurs who run small businesses and a harsh mandate that requires employers to provide health care or face a penalty…” - House Republican Leader John Boehner [7/31/09]

Fact: Small businesses benefit enormously from America's Affordable Health Choices Act.

  • Reform dramatically reduces small business health costs. The Small Business Majority recently released a report that showed that without reform, small businesses will pay nearly $2.4 trillion in health care costs over the next 10 years. If health insurance reform is enacted, the report found that small businesses could save as much as $855 billion over 10 years, nearly 36 percent. This money can be reinvested in the business and jobs.
  • Reform eliminates price and benefit discrimination against small businesses. A Commonwealth Fund study found the smallest firms pay an average of 18 percent more in health insurance premiums for the same benefits than larger firms. By creating a pool and offering assistance, the House health insurance reform bill will lower small business costs and increase options. Alternatively, those who would rather contribute than offer will have a discrete, predictable contribution and the knowledge that their employees will have decent affordable health care.
  • Reform can save and increase jobs. Phillip Cryan, an economist from the University of California-Berkley, estimates that the 8 percent employer responsibility requirement in H.R. 3200 would result in a net gain of 55,365 jobs, a rise in productivity, and a slowing in the rate of health inflation.
  • Most small firms are exempt; others are subject to lower rates. 76 percent of all businesses are exempt altogether from the employer responsibility requirements. An additional 7 percent of these firms would pay a graduated rate of 2 to 6 percent if they do not offer coverage. More than 72 percent of firms with payrolls of $250,000 to $500,000 and less than 250 employees already offer worker health coverage today - and will have better options under HR 3200.
  • Small business owners and their workers account for the largest share of the uninsured. An estimated 27 million of the 47 million Americans without health insurance are small business owners and their workers, according to the National Federation of Independent Business. H.R. 3200 provides market reforms and assistance to ensure coverage for small business owners and their employees.

That is why employers of all sizes are supporting the America's Affordable Health Choices Act. The Main Street Alliance, a small business group, supports the bill because it “will help make America's small business more competitive by giving them greater control over one of the most costly and unpredictable aspects of doing business: the spiraling costs of providing quality health coverage.” [7/15/09]

For more health insurance reform myth busting, please click here.

For more information on America's Affordable Health Choices Act, please click here.