by Matthew Rusling

    WASHINGTON, Jan. 8 (Xinhua) -- Amid swirling debate over U.S. President Barack Obama's health care reforms, critics point to a number of provisions in the Senate bill that could amount to burdensome taxes on low and middle income earners.

    Others, however, said the taxes are unlikely to impact those on the lower end of the economic ladder in any significant way.

    Health care reform has been at the top of President Obama's domestic agenda since he took office last year and is the source of bitter partisan rivalry. Democrats have passed bills in both chambers of Congress and a final draft is now being hammered out for the president's signature.

    The health care overhaul aims to extend coverage to millions of uninsured Americans, as well as to individuals whom insurance firms will not cover because of pre-existing conditions.

    But a number of tax provisions, which could end up in the final legislation, have raised eyebrows. Robert Book, fellow at the Heritage Foundation, a think tank opposed to Obama's health care overhaul, took issue with a 700-dollar tax penalty for those who decline to obtain health insurance.

    The provision limits choices and imposes new taxes on those least able to pay, amounting to discrimination against low income earners, he said.

    "If you have been choosing between food and health insurance, you no longer have that choice," he said. "You must buy the health insurance, and (the government) will decide what kind of health insurance people will buy and how much they will pay for it."

    The plan would make exceptions for religious objectors, undocumented migrants, and possibly in some "hardship" cases.

    The bill would also impose annual fees on medical device makers and drug companies, which amount to new taxes that would be passed on to consumers in the form of higher prices to patients who pay out of pocket. The costs will also be passed on to insurance plans, which will have to raise their premiums, he said.

    The fees would apply to medical devices such as powered wheelchairs, breast-milk pumps, pacemakers, hearing aids, prosthetics and replacement joints. It would also be tacked onto diagnostic equipment such as MRI and CT machines.

    The Senate bill would impose an annual fee on prescription drugs that also amounts to a tax, he said, although it does not extend to generic drugs designated by the Food and Drug Administration.

    The legislation would levy a 40-percent excise tax on so-called "Cadillac health plans," viewed by many as deluxe, super-policies held only by the wealthy.

    Critics said the tax will hit millions of middle class policy holders and force them to cut back on medical care.

    The tax would impact plans exceeding 23,000 dollars a year for family coverage and 8,500 dollars annually for individuals and begin in 2013.

    The Congressional Budget Office estimated it would apply to around 20 percent of those covered under their employers' plans --around 31 million people.

    After six years, it would impact one-fifth of households earning annual incomes between 50,000 dollars and 75,000 dollars a year, according to Congress' Joint Committee on Taxation.

    Others, however, said the tax is unlikely to significantly impact middle and lower income earners. And proponents said reforms would raise nearly 150 billion dollars over the next decade.

    Dean Baker, co-director at the Center for Economic and Policy Research, said the debate on "Cadillac" plans is misleading.

    Individuals holding plans valued at 23,500 dollars -- 500 dollars over the 23,000 dollar threshold -- would pay taxes only on the last 500 dollars. While some middle income earners would cross that line, the result would be a tax of 200 dollars.

    "I'm just not terribly troubled by that," he said, although he is not in favor of the tax. Still, health care reform will help many lower and middle class individuals and families, which makes the tax a minor issue, he said.

    Dave Kendall, an expert on health policy at Third Way, a think thank in favor of Democrats' vision on health care, said not having coverage will hurt the poor more than any taxes.

    Indeed, those without coverage must often visit an emergency room in order to receive treatment. "They get stuck with the bill and end up in bankruptcy," he said.

    The lowest earners are unlikely to be taxed, although others may pick up some of the tab, he said.

    "For the very poor there is no issue. For people who are near poor, they will have to pay a certain percentage but the benefits will outweigh the costs," he said.

    And since millions of additional consumers will be covered under health care reform, medical device companies, for example, will receive more business. That will drive up demand, lower costs and prevent taxes from being passed onto consumers.

    "Those taxes will be offset by increased revenue," he said.

    The same principle can be applied to annual fees imposed on insurance companies -- increased competition will lower the costs of entering new markets.

    Health care exchanges -- websites where individuals and small businesses will be able to compare and purchase plans -- will lower companies' advertising costs, he said.