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Health care needed attention

Health care reform has been a hotly debated topic since President Obama took office in January 2009. But, actually, the debate over the nation’s health care system, and the desperate need to reform it, has raged-on at least since the mid-1930s.

President Franklin D. Roosevelt began his “New Deal” with Social Security in 1935, and President Lyndon B. Johnson created his “Great Society” with the start of Medicare in 1965. Since the inception of these two programs, costs for both plans have spiraled out-of-control. In fact, there is no end in sight to the upward spiral as the “aging of America” is in full bloom (more baby boomers enter the programs and live longer) and there are fewer younger workers to sustain the programs through new payroll tax withholdings.

Despite numerous attempts by Medicare to restrict spending during the last 30 years, healthcare costs in the U.S. have risen from $253 billion in 1980 to a staggering $2.3 trillion in 2008. According to Medicare’s actuaries, healthcare costs are projected to almost double to $4.5 trillion by 2019, consuming nearly 20 percent of the nation’s entire GDP.

The seemingly endless spiral of health care cost is a grave concern. However, the story only gets worse. It is inconceivable that in a country as great as ours, while spending almost 20 percent of its treasure on health care, there are still over 47 million uninsured individuals in the U.S. And, the problem of the uninsured is not just a problem for the poorest of our nation’s citizens. More than one-third of the uninsured, or 17 million individuals, are in households with annual incomes of $40,000 or more.

Two-thirds of the uninsured are in households with at least one full-time worker.

The health care reform law of 2010 (the “Patient Protection and Affordable Care Act,” or the “Act”), signed by President Obama on March 23, 2010, although hugely unpopular at the time, was necessary to begin addressing the health care crisis in the U.S. The Act imposed new Medicare taxes on both earned and unearned income of high income taxpayers (generally those with at least $200,000 AGI), an excise tax on indoor tanning services, and other minor taxes and modifications to regulations of HSA’s, Archer MSA’s and other health flexible spending arrangements.

The popularity of reform has increased as time has passed, as politically-charged rhetoric diminished, and as advantages of the act became better known by employers and the general public.

The act provides a health insurance tax credit of 35 percent to 50 percent for employers with ten to 25 full-time employees.

There are also easier provisions to establish a simple cafeteria plan for employers with up to 100 employees, a provision for keeping eligible dependents in group health plans through age 27, and other provisions for health insurance exchanges, insurance subsidies, and tax credits for individuals and families in future years.

Russell Eldridge is a CPA at Silas Simmons, LLP, 209 North Commerce St., Natchez. He can be reached by calling 601-442-7411.

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