Background- President Obama's health care reform is the antithesis of President Reagan's supply-side economics. Reagan started with the idea that people respond to incentives. They key economic concept was the marginal tax rate.
Summary- Obama wants to increase the marginal tax rate, which would implicitly be part of the health care reform. This posses a huge problem, healthy people (those without pre-exiting health problems) can wait to buy insurance, which would screw up the community rating, a problem in itself, part of the health reform. So basically, in order for the health care reform to work a lot of money will be spent.
Analysis- Reagan's supply-side economics, the marginal tax rate came from 50% to 28%. With Obama increasing the marginal tax rate, many middle class families will be affected. According to Reagan higher marginal tax rates discourage the American from working to their potential.
Commentary- I definitely think that a universal health program is needed in the United States, but it still needs some work. Increasing the marginal tax rate to implicitly put money into the health care reform, is not what I feel is the right thing to do. It will be interesting to see how the bill transforms, in the coming weeks.
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