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The Revenue Impact of the Baucus Plan

1 min readBy: Joseph Bishop-Henchman

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The Congressional Budget Office/Joint TaxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. Committee score of the Baucus health care plan is out. (CBO’s site is getting hefty traffic, so we’ve uploaded it here as well.)

SPENDING INCREASES & TAX CREDITS (over 10 years)

Additional outlays for Medicare and CHIP

$345 billion

Federal Subsidies for Insurance Purchases

$461 billion

Tax Credit for Employers Offering Health Insurance

$23 billion

TOTAL

$829 billion

REVENUE INCREASES (over 10 years)

Excise Tax on High-Premium Insurance Plans

$201 billion

Penalty Payments by Uninsured Individuals

$4 billion

Penalty Payments by Employers whose workers receive subsidies

$23 billion

Other

$83 billion

TOTAL

$311 billion

SPENDING REDUCTIONS (over 10 years)

Reductions in Medicare Payment Rates

$162 billion

Medicare Advantage Payments Set at Average Bid

$117 billion

Reductions in Medicare and Medicaid Hospital Payments

$45 billion

Other Program Savings

$80 billion

TOTAL

$404 billion

REVENUE INCREASES ELSEWHERE (over 10 years)

Other

$196 billion

NET CHANGE TO 10-YEAR DEFICIT: -$81 billion

As the non-economist, I should note that when Medicare was passed in 1965, it was estimated to to cost $3 billion in 1990, the equivalent of $12 billion after adjusting for inflationInflation is when the general price of goods and services increases across the economy, reducing the purchasing power of a currency and the value of certain assets. The same paycheck covers less goods, services, and bills. It is sometimes referred to as a “hidden tax,” as it leaves taxpayers less well-off due to higher costs and “bracket creep,” while increasing the government’s spending power. . The actual cost in 1990 was $98 billion. And my earlier blog post on the argument that entitlement programs paying for themselves is worth relinking to.

I’d also like to know what that “other” $196 billion in increased revenues are, since that’s the difference between this thing increasing the deficit or not.

Note: Corrected after posting to note that the plan is projected to reduce the deficit, not increase it.

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