The latest misrepresentation about health care reform legislation is that it will take money away from Social Security. This is false, the bill does not increase Social Security taxes. The Congressional Budget Office estimate of the health care legislation shows an increase in Social Security revenues because CBO expects that the legislation will result in higher wages for employees.
The increased revenues are the result of the health insurance reforms in the legislation, particularly the excise tax on high cost plans. The increased Social Security revenues CBO estimates will be generated by health insurance legislation underscores one of the key benefits of the legislation -- lowering health care costs will result in higher wages, which is good for Social Security finances, but more importantly for families and the economy as a whole.
By driving down health insurance premiums, particularly in higher-cost plans, the health bills will lower some health insurance premiums. Some employers will pass on these savings to their employees in the form of higher wages and salaries. Health insurance premiums are not subject to FICA, but wages and salaries are. CBO projects that the resulting increase in wages will generate $29 billion in additional FICA contributions to the Social Security Trust Fund.
As with all FICA contributions, by law these revenues may only be used to pay for Social Security benefits and the cost of administering Social Security. They cannot be used for any other purpose, including health insurance reform.
The health care legislation the House is considering today is fully offset without counting any of the increased Social Security revenues, as required by the recently enacted Statutory PAYGO Act. The total budgetary effect of the legislation would reduce the deficit by $143 billion over the 2010-2019 period, with only $29 billion of those savings from off-budget revenues for Social Security.