Florida Seniors Queasy Over Obamanomics
Around the State
The conservative Washington, D.C.-based think tank forecasts that:
- Scheduled tax hikes on capital gains taking effect Jan. 1 will hurt 57 percent of Florida seniors, who rely on retirement savings accounts for their fixed income.
- Nearly tripling the top dividend tax rate will depress the value of stocks in several industry sectors by more than $211 billion, serving as a double whammy to seniors who will receive fewer dividends that are taxed at a higher rate.
- Already-enacted federal health-care legislation will force some 543,963 Florida seniors out of health plans in Medicare Advantage (which currently makes up about one-fourth of the Medicare program).
When the Patient Protection and Affordable Care Act’s Medicare Advantage reforms take effect, they will restrict senior citizens and the disabled to fewer and worse health care choices, reducing their access to quality health care, Heritage analysts say.
"The PPACA will force an estimated 7.4 million people (50 percent of enrollees) out of health plans they would have chosen under prior law and into the fee-for-service program," the report states.
What's more, transferring beneficiaries to a fee-for-service program will also have the secondary effect of increasing Medicaid and Medicare Part D spending by almost $2.5 billion in 2017, the report projected.
"Medicare beneficiaries who would have enrolled in the Medicare Advantage program under prior law will lose an average of $3,714 in 2017 health care services," according to the report, "disproportionately harming low-income and minority beneficiaries, increasing state and federal Medicaid costs, and increasing spending on prescription drugs."
The health-care law, which is being challenged by Florida and 20 other states, also has taken hits from the Florida Medical Association, which envisioned ill-effects for the state's senior population.
"The FMA opposed the passage of the federal health care legislation because we felt that Congress could have passed a better bill that would have fixed the Medicare program, provided more options for seniors, and protected the relationship between physicians and their patients," said FMA Executive Vice President Tim Stapleton.
Even seniors in the pink of health will feel financial pain if the Democratic Congress fails to extend the Bush-era tax cuts past Dec. 31.
Unless Congress and the Obama administration act, the top tax rates on qualified dividends will jump from 15 percent to 39.6 percent on Jan. 1.
That means dividend payments will be taxed at a much higher rate than capital gains, distorting how companies return value to shareholders and penalizing companies that pay dividends, Heritage said.
While Florida's large senior population will be affected because of its disproportionately high rate of holding dividend-paying stocks, higher taxes on dividends also will hamper American companies' ability to compete globally, the study argued.
According to the Heritage analysis, higher taxes will drive stock prices down, thereby reducing the wealth of shareholders.
"Businesses will pay seniors fewer dividends because a (relative) lower capital gains tax rate will induce the businesses to retain their earnings. This will be a double blow to seniors that will shrink their income even further," the report stated.
Conservative economists recommend that Congress keep the dividend tax rate at 15 percent -- equal to the capital gains rate.
In addition to dividend and capital gains taxes, several other tax increases loom -- including higher marginal rates for virtually all income levels and the resurrection of the estate ("death") tax, which would go from 0 percent this year to as much as 55 percent Jan. 1.
If current rates are allowed to lapse, some economists estimate that inaction would amount to a $110 billion tax increase next year.
"The imminent threat to senior citizens' health care will only be resolved once Obamacare is repealed. And the only way to protect seniors' retirement savings is to reject the Obama tax hikes," said Heritage fellows Rea Hederman and Patrick Tyrrell.
But a liberal group, the Florida Progressive Coalition, discounts such doomsday scenarios, calling Heritage "a hyperpartisan ideological organization that eschews the scientific method to achieve results that support their pre-held positions."
"For instance," says Kenneth Quinnell, executive director of the coalition, "they say the majority of seniors are going to be 'hurt' by these changes when, in reality, most of the changes will have little to no impact on seniors. The bulk of these changes will affect the wealthiest Americans and the change is simply a matter of making sure that the wealthy pay their fair share."
Though their diagnoses differ, Quinnell and Heritage do agree on one thing: The current system of paying for health care needs improvement.
"Medicare Advantage is actually a private insurance company run by Medicare and it is very wasteful, with more than 14 percent of costs going to profit," Quinnell said. "Cutting the Advantage program will actually allow for more money spent in Medicare to go directly to care for seniors, and the money spent will be more efficiently spent and not go to private profits."
Heritage says fee-for-service (FFS) rates in South Florida are bloated by waste and fraud.
"Using measured FFS costs as a basis for Medicare Advantage payment locks in massive and, in the view of many, irrational regional variations in FFS spending," the Heritage researchers wrote.
"In 2009, the expected monthly cost of an FFS enrollee in Dade County was $1,213 -- more than twice the expected FFS spending level of $589 per month in Portland, Ore. Many experts believe that spending in South Florida is inflated by extraordinary amounts of waste and fraud in the FFS program."
James C. Capretta, a co-author of the Heritage report, told Sunshine State News: “Medicare Advantage plans that have a strong incentive to root out fraud in their payments are getting cut under the Obama plan, which means more beneficiaries migrating into the fraud-heavy FFS program in South Florida."
As for taxes, Republicans on Capitol Hill want to keep the 2010 rates in place, while Democrats are split. President Obama, expressing a desire to increase revenues and raise rates on higher-income earners, opposes an across-the-board extension of the Bush cuts.
Senate Majority Leader Harry Reid, D-Nev., has promised a vote on taxes before the Nov. 2 election, but he has yet to specify what proposals will be voted on.
Contact Kenric Ward at firstname.lastname@example.org or (772) 801-5341.