Illinois Health Care

By: Steve Larson

Posted: 2/5/10

Democratic congressional leaders are in talks to develop a new strategy to help finance their ambitious healthcare plan. This plan would apply Medicare payroll tax to capital gains, dividends and other forms of unearned income as well as wages. It could also help Medicare through its financial difficulties and place the new tax burden on mostly upper class Americans, leaving the middle class relatively untouched.

Senior citizens, who are dependent on their savings and investments, will feel some burden of these taxes. This new tax on investment is part of the ideas being considered as part of Obama's work on expanding healthcare coverage, and cutting healthcare costs. "This president's participation in the details is an indication of how critically important he thinks it is for the American people, to do what he said he would do, and that is to be sure that every American has access to affordable, quality healthcare," said House Majority Leader Steny H. Hoyer (D-Md.) to the Chicago Tribune.

One of the most important questions to be resolved will be how the new bill's spending will be offset following Obama's promise that these changes would not add to the deficit. Senate Democrats and the President would like a big part of the financing for this program to be a tax on expensive health insurance plans. Leaders of these plans are trying to scale back the money that could be taxed, resulting in losses from the new healthcare plan.

Expanding taxes on Medicare could help take some of the burden away from other forms of raising money. "It's a very progressive way to raise money," said Roberton Williams, an analyst at the nonpartisan Tax Policy Center in an article for the Chicago Tribune. "It would protect union workers. It would definitely target people who are better-off, but it could hit some of the elderly who are relying on savings to get by." In a Chicago Tribune article, Representative Robert E. Andrews of New Jersey said, "Those who benefit most from increased economic growth are the wealthiest among us. I think it's most fair to ask them to bear the short-term burden of the program."