Compassionate Conservatism
The low-income individual, who doesn't receive health coverage paid by his employer, buys a policy with limited benefits - a "Hyundai" plan - after paying taxes on his income. Thus, taxpayers subsidize those with the Lexus plans and the policy penalizes those with the Hyundai planHe has a solution for the problem which, he assures us, will lower medical costs and won't hurt a bit:
The most significant and simplest policy to control costs - one that has thus far been rejected by President Obama and the Congress - is to tax employer-provided health care benefits. It is not the only step, but it may be the most important one.Those benefits disproportionately favor the wealthiest Americans with the most luxurious health plans and cost taxpayers $120 billion each year, according to the Joint Committee on Taxation. The cost to taxpayers increases each year as premiums grow.
But he expects resistance from the wealthy people who will bear the new tax. And who are these plutocrats?
Why did the House and Obama cave so quickly on what might be the most important measure in controlling health care costs? Based on my experience in the California Assembly, organized labor probably moved quickly to protect the generous benefits its members receive. Like organized labor, the 85 percent of us with health insurance (the latest estimate from the Census Bureau) benefit from the largesse in today's system and will resist change.
And what are these luxury health plans?
An excessive plan is one with few or no co-payments, few or no deductibles and little or no consumer responsibility to keep health care costs contained.
In other words, a plan where the insured night actually get payments for medical care from the insurer.
But help is on the way. All that we need to do is to tax employer provided health benefits. Nation estimates that it will bring in up to $120 billion in new tax revenue per year which will help reduce the deficit. We might use some of this to subsidize health insurance for poor people. Even if we do not, it is sure to produce cost savings as the rest of us trade down our Lexus health plans and cut our profligate spending on health care.
And the alternatives will cause economic chaos:
Obama is proposing to raise federal revenues by reducing tax deductions for people who earn more than $250,000 a year. The solution in the House, a surtax of as much as 5.4 percent on couples with more than $1 million in income, is even worse. These two non-solutions add to the federal debt, fail to address the health care equity issue, and do nothing to control health care costs.Because, you see, not all tax hikes are equal. It is a well known fact that taxes on the rich destroy the economy while large tax increases for working people make things work better. Tax employer provided health benefits but let rich people continue to deduct the interest on their Aspen ski condos.



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