The Cato Institute hosted a discussion of the current Senate Healthcare bill entitled, “Will the Senate Healthcare Bill Keep the Poor Poor?” to consider the unintended effects in the proposed piece of legislation. The Cato Institute’s Michael Cannon answers the question with a variety of well researched and thorough graphs and pie charts that answer that question with an unequivocal “Yes!”

Most of this research was based on calculating tax rates and lost subsidies. By requiring the general population to purchase health coverage, the government is  effectively levying a new tax on its citizens. For instance, the current Senate bill requires a single adult at the poverty line pay nearly 2% of his adjusted gross income in this new “mandate tax.” As income rises, the tax goes from 2% to max out at 9.8%.

In addition to the additional burden of a tax, there is the ever looming possibility that by showing initiative and working hard a worker could lose the subsidies that the government uses to make up the difference between what the taxpayer pays toward healthcare and the actual cost of the policy. By losing the subsidy, the taxpayer would be charged hundreds or thousands of dollars, effectively negating the effect of the increased income.

Under the proposed plan, those taxpayers do have the option of not purchasing health insurance and simply paying the penalty which is considerably less expensive than the actual cost of healthcare with or without the subsidies. This would be a practical solution considering that the penalty is actually less than the cost of the insurance. In addition, the Senate plan requires the insurance company to insure anyone, regardless of medical situation or condition.

The conclusion was obvious from the beginning, the Senate healthcare bill will only keep the poor poor by punishing those who strive to excel in life with crushing financial costs for menial gains.

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