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1 Scott Hodge, Distributional Effects of the House of Representatives' Health Care Reform Bill 1 (2009)

handle is hein.taxfoundation/ffbjdxz0001 and id is 1 raw text is: FOUNDATION October 6, 2009 No. 193 FISCAL FACT Distributional Effects of the House of Representatives' Health Care Reform Bill By Scott Hodge Introduction The health care reform bill that has cleared committee in the House of Representatives, HR 3200, has been praised as the fundamental reform that America's health care system needs and criticized as a step toward government-run health care. In this Tax Foundation Fiscal Fact, we provide a somewhat different look at the bill by focusing on its distributional effects; that is, if it were signed into law as is, we estimate here how much income it would tax from some people to spend on others.' Income Redistribution Is at the Heart of Health Insurance Reform For many champions of the health insurance reform plans currently being debated on Capitol Hill, a major goal is the redistribution of income down the income scale, yet no estimate of the House bill's distributional impact has thus far been done. Using economic analysis of the bill from the Congressional Budget Office (CBO),2 this analysis utilizes the Tax Foundation's Fiscal Incidence Microsimulation Model to produce estimates of how income redistribution will change if the bill becomes law. Specifically, we allocate the budgetary amount of tax increases to each family, as well as the budgetary amount of spending changes to each family (see Notes at the end for methodological assumptions). For fiscal year 2016, the first full year in which the health care bill would be in effect, income redistribution would increase from the very top income groups, due in large part to the proposed surtax on high-income individuals. Most of that new redistribution would be spent on families in the middle of the income spectrum, 1 This analysis ignores any efficiency gains or losses (i.e. aggregate income growth) resulting from the proposed health care legislation. 2 Letter to the Honorable Charles B. Rangel from Douglas W. Elmendorf, dated July 17, 2009. See t!p:iWWcbo.gov'pdio-c1s/.04xx, doc10464 hr320.2p. Scott Hodge is president of the Tax Foundation.

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