The Congress has looked at taxing about everyone and everything to pay for half the cost of a health care bill.
They’ve considered sugary soft drinks, beer, “millionaires,” and “gold plated” health benefits to name a few. Every time they come up with one it gets shot down by the interests it would offend.
First, as I have asked on this blog before, why do we need to use at least $500 billion in new taxes to pay for half the cost of a health care entitlement expansion bill? We will spend somewhere between $35 trillion and $40 trillion on health care in this country over the next ten years. Many experts contend there is as much as 30% waste in what we spend.
Advocates of a health care bill say we need it to reduce the cost of health care in this country that will otherwise bankrupt us if we don’t fix it.
With as much as $10 trillion to $12 trillion in waste, and cost containment as the stated goal, why do we need to raise people’s taxes $500 billion to pay for an expansion of coverage?
But since it is clear that the Congress and the White House have all but given up on real health care reform that would really “bend the curve” they are adamant they are going to raise taxes to pay for at least half the cost.
So, being rejected by all the interests that effectively countered every other idea for a tax increase, advocates now look to be excited about taxing insurance companies. The most talked about tax would be a tax on insurers who issue the “gold plated” policies—apparently a surtax on the value of such policies. But there has also been talk of a broader premium tax on all policies.
First, having run an insurance operation I can tell you exactly what the insurers will do with that tax—pass it directly onto the consumer. Today, most states charge a premium tax—usually about 2% of premium—on all insured (not self-insured) health insurance business. When calculating the premium on those policies, the insurer just adds the 2% tax as an expense factor and passes it on to the customer—like all other costs of doing business. This is not a theoretical exercise—the tax gets directly passed on and is embedded in the premium the consumer pays.
That’s why this would be a chicken tax.
Given all the beating the advocates have taken on all of the other tax ideas they’ve floated in recent weeks and having had to retreat on those, they are now looking at having someone else be the tax collector.
"This is a tax on insurance companies" goes the political argument—not on consumers or sugary soda or millionaires. The tax on insurers is popular this week because they are at the bottom of the political heap in Washington, DC these days—all that "good will" from things like $2 trillion offers hasn’t gotten them a lot.
And, such a tax "would discourage such overly generous health plans" goes the reasoning.
But it’s still a chicken tax—chicken because the politicians aren’t willing to look voters in the eye and tell them that with $10 trillion to $12 trillion in waste they still have to raise their taxes by at least $500 billion to pay for a health care entitlement expansion and chicken because those same politicians can’t face the “millionaires,” or unions, or even soda bottlers, or people with "gold plated” health care directly, or the rest of us for that matter, and tax us all directly.
When you get down to it, this is all devolving into a chicken exercise because no one in the Congress is really willing to face the real issue—the cost of health care in America. What else would you call a bill that will expand the health care entitlement but not face the hard choices necessary to really make America’s health care system affordable and sustainable?
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