One of the major concerns about the Senate health care bill rests in the new excise tax on worker benefits that many people remember as a proposal originally made in last year's campaign by John McCain.
That tax on so-called "Cadillac benefits" seemed like a good idea, especially coupled with the prospect of a public option in the bill to control health care costs for millions of Americans.
Unfortunately, though the public option has been stripped out, the health benefits tax still remains. While there could have been some argument for its inclusion if publicly funded health care were made available, the combination of this tax on the middle class and individual mandates on the working poor might make this the most regressive reform proposal ever made by a Democratic Congress. Especially in light of the fact that the groups that funded the heritage Foundation studies that promoted this tax are the same groups getting away scott free from the employer mandates and taxes needed to make a national health care system work.
The idea for a tax on "Cadillac" health benefit plans did not result as a response to the recent rise in health insurance costs for working Americans as many of its proponents claim.
It instead came from none other than Ronald Reagan as far back as 1982, and was picked up by conservative groups, most notably the Heritage Foundation who documented the historyof this unpopular GOP tax before it became an unpopular Democratic one:
President Ronald Reagan first proposed a change to the tax law governing health insurance in 1983, but Congress never acted on the proposal. Six years later, analysts at The Heritage Foundation unveiled a national health reform proposal grounded in comprehensive tax reform. Now, the idea could—depending on its details—potentially serve as the basis of a bipartisan compromise on health reform in the coming months.
The reason why the free market anti-tax followers of Ayn Rand proposed this tax is because it would allow groups like the junk food industry from paying any new taxes on things like the sale of sodas and junk food to fund health care. Remember the video with the whiny red-head who ranted about her right to pump her kids full of soda Yep, those are the people the funded these studies with the purpose of leading you to pay their taxes for them.
The Communications Workers of America recently pa report from the Joint Committee On Taxation to review the effect of this new excise tax, now that cost controls would be taken out of health care reform. The survey results not only are pretty disasterous policy wise, but would serve as a Democratic party re-enactment of the Jones Mass Suicide from back in the 1970s as a whole new generation of families are suddnly turned from Hope and Change to the new crop of Ayn Rand devotees. According to the report which was released yesterday, the GOP inspired tax would cost middle class families an extra $1,100 in annual tax payments while those making over $1 million would pay only $2,600 while earning 20-30 times more. According to the report, the tax would also:
•Affect 19 percent of workers with employer-sponsored health coverage in 2016.
•Affect nearly 25 million households(ii) in 2019, including one-fifth of middle-class households making between $50,000 and $75,000.
•Affect about 25 percent of health plans by 2019.
•Cost affected households an additional $7,500 in taxes on average between 2013 and 2019, or more than $1,000 a year.
•In 2019, cost affected taxpayers who are millionaires an extra $2,600 in taxes and those making between $50,000 to $75,000 an extra $1,100 in taxes, but the wealthy taxpayers’ income will be at least 13 to 20 times greater.
•Be a tax increase of 0.1 percent of income for those households affected that make more than $1 million a year and be a tax increase of 1.4 percent for those households affected that make $50,000 to $75,000.
The JCT assumes that 82.5 percent of the revenue raised from the tax will be generated by increased wages to make up for health benefits cuts and increased cost sharing. However, most employers say they will not increase workers’ wages in response:
•Only 9 percent of human resource executives in a recent Towers-Perrin survey said if health care reform reduced their benefit costs would they increase salary or direct compensation; 78 percent said they would retain the savings in the business as profit.
•Just 16 percent of health plan sponsors in a recent Mercer survey said they would convert any health care cost savings into higher pay for their workers.
So, at the end of the day, the Senate health care bill would provide no Medicare buy-in, force people to buy health insurance and call it providing for them and would let Corporate America off scott-free with taxpayers holding the bill.
Even worse, the Republicans who originally proposed this mess will have the Democrats to blame for what to the public will look like yet another tax that they the GOP can hammer over our heads with. Kind of like how Clinton was used by Wall Street to do the GOP's dirty work by passing NAFTA while the GOP was left free to trash the Democrats in the next election.
This is not only bad and unfair policy to millions of hurting Americans who are struggling to get through this recession, it is horrible politics. That is why the House approach which taxes those making over $500,000 to pay for health care is not only a smarter and more pragmatic approach, it is fair to the poor and to middle class American families.