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Politics

A Hidden Tax Hike on Seniors

Feb. 28, 2013 1:15am

Nicole Kaeding is the state policy analyst at Americans for Prosperity.

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President Obama meeting with seniors (AP photo)

Last summer, Americans for Prosperity analyzed the disappointing Medicare reforms in the president’s signature health care law. This month, President Obama suggested additional so-called reforms to Medicare in this State of the Union speech. Just like his reforms in 2010, these proposals fail to address the underlying issues in Medicare. One reform in particular, Medicare D drug rebates, cloaks a tax hike for seniors in the rhetoric of class welfare.

Medicare Part D was created in 2006 to allow seniors to purchase prescription drug coverage to support traditional Medicare coverage. The program harnesses the power of the free market by allowing insurance companies to compete for business. Seniors have numerous options for purchasing their coverage, and the program has been wildly successful. Almost 90% of seniors are satisfied with the program and costs are 40% below original estimates—an incredible feat for any government entitlement program.

During the State of the Union, the president said “We’ll reduce taxpayer subsidies to prescription drug companies.” This seems like a great idea that everyone should support. But like most things from this President, his rhetoric distorts and disguises the real issue.

Insurance companies negotiate prices with all providers within its system, including drug companies. Insurers want to ensure the best quality drugs at the lowest possible prices, driving down the total cost of insurance. The drug manufacturers try to negotiate for the best price for their end. As with all voluntary trades, a mutually-beneficial, consumer-focused outcome is achieved.

The president is out to disrupt this delicate balance. He claims these negotiations results in a “subsidy” to drug makers; they are making too much money at taxpayer’s expense. That’s only because the insurance companies don’t force drug makers to sell their products at a loss as the government does in Medicare’s poorly-run sister, Medicaid.

Under the president’s Medicare proposal, drug companies would need to rebate up to 23% of their drug sales back to Medicare as determined by health care bureaucrats. This isn’t a “rebate” at all; it’s a tax on drug companies.

Obviously, this would have dramatically impacts on the market. Drug companies would respond by embedding the cost of tax in the price of their drugs, driving up the end cost of insurance for seniors. Increasing the price of insurance—due to direct government involvement—functions exactly as a tax increase for seniors. A recent study by the American Action Forum estimates that these drug rebates would increase the price of Part D premiums up to 40%.

Instead of outright supporting a tax on drug companies, like he has with medical device makers, the president hides his real agenda in harmless sounding language of ending unfair subsidies.

Again and again, President Obama supports Medicare reform plans to consolidate power in the hands of bureaucrats removing choice and competition. This latest proposal embodies the president’s preferred outcome with dastardly results for seniors—a 40% increase in the price of insurance.

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Comments (13)

GSFixit
Posted on March 1, 2013 at 3:44pm
It’s the Chicago Way, cut me in or cut it out….

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HOPE-4-CHANGE
Posted on March 1, 2013 at 10:40am
AARP supported obama care and his re-election. Seniors, gotta love it that the AARP’s got your back.

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Wannabee
Posted on February 28, 2013 at 9:16pm
Advice to Seniors
Call and write your members of congress to write law eliminating the 23% tax that BHO incorrectly calls a subsidy to prescription drug companies. This is an additional hidden tax raising our Part D premiums by an estimated 40 Percent. If you now pay $40.00 per month for Part D it will go up to $56.00 or $192.00 per year, a result of this tax. it may go even higher to account for inflation and new regulations
If BHO gets this bill sent to him for signature and vetoes it, you will be experiencing the second step of BHO stealing from Medicare to support Obamacare for 20+ millions of uninsured’s, including illegals.
The first step takes place March 1, 2013, when he takes 714 billion dollars out of the Medicare Fund to pay for Obamacare.
BHO has done a con job on seniors that makes Bernie Madoff’s con appear like kid’s play..
The worst is already seen on the horizon, Physicians retiring, leaving private practices, facing a bureaucracy like never before seen in America, medical device maker’s innovation weakened by taxes and regulation. It is already difficult to get appointments as a new patient with specialists. It will be a nightmare sooner than you think.
BHO will not shed tears if we die, so long as he got your vote last November. For him, it’s all about establishing his new world order, high on Secular-Humanistic –Progressivism.

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Wannabee
Posted on February 28, 2013 at 9:08pm
Advice to Seniors

Call and write your members of congress to write law eliminating the 23% tax that BHO incorrectly calls a subsidy to prescription drug companies. This is an additional hidden tax raising our Part D premiums by an estimated 40 Percent. If you now pay $40.00 per month for Part D it will go up to $56.00 or $192.00 per year, a result of this tax. it may go even higher to account for inflation.and new regulations
If BHO gets this bill sent to him for signature and vetoes it, you will be experiencing next iof BHO stealing from Medicare to support Obamacare for 20+ millions of uninsured’s including illegals.
The first step takes place March 1, 2013, when he takes 714 billion dollars out of the Medicare Fund to pay for Obamacare.

BHO has done a con job on seniors that makes Bernie Madoff’s con appear as kid’s play..

The worst is already seen on the horizon, Physicians retiring, leaving private practices, facing a bureaucracy like never before seen in America, medical device maker’s innovation weakened by taxes and regulation. It is now difficult to get appointments as a new patient with specialists. It will be a nightmare sooner than you think.

There is one salvation though. Die! BHO will not shed tears, so long as you voted for him on November 6, 2013.

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AbrahamsSheepdog
Posted on February 28, 2013 at 7:14pm
Unborn ane/or dying cost $ money and don’t pay taxes. Useless to progressive lib slave tax program.

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RamonPreston
Posted on February 28, 2013 at 6:02pm
Raise our costs and that phony smile makes me sick. Let’s see if he is still smiling in the lake-of-fire.

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- bharris0
  Posted on March 1, 2013 at 6:44am
  I suspect that is where he originated so he may feel pretty comfortable there.
  
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captjack63
Posted on February 28, 2013 at 4:53pm
As he said it will not be believed till it’s to late.

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msjoe43
Posted on February 28, 2013 at 3:06pm
Seniors thrown under bus. Obama throws his mother-in-law under bus. Obama already threw his dead grandmother under bus.

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- RamonPreston
  Posted on February 28, 2013 at 6:00pm
  She wasn’t dead until he threw her under the bus. Died just before election so she couldn’t tell people she was there in the room when he was born in Kenya. Very convenient.
  
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PIGSWILLNEVERFLY
Posted on February 28, 2013 at 1:06pm
Please watch this video…everyone needs to see this:

http://www.theconservativetreehouse.com/2013/02/28/former-kgb-agent-yuri-bezmenov-explains-our-four-stages-the-new-normal-2/

it’s only 10 minutes and we’re already at STAGE 3…..who will survive?

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- LetThereBeLight
  Posted on February 28, 2013 at 2:39pm
  Great video and link, thanks!
  
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Marylou7
Posted on February 28, 2013 at 6:45am
Could this be to assist his death panel? This would help wipe out the poorest among us and that is always pleasing to Marxist.

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