Go Ahead, Tax those Benefits, it's Central to the Health Plan

National Nurses Movement — Wed, 01 Jul 2009 18:12:33 GMT

Enough already on the handwringing over the plan to start taxing employee healthcare benefits.

The tax is not a threat to the type of reform plan expected to emerge from Congress. It's a central element -- to pay for the massive public bailout of the health insurance industry and as a backdoor way to cut costs by discouraging people from seeking medical care.
Here's the basic scheme of how this complicated plan is supposed to work:

Everyone not presently covered will be forced to buy private insurance -- the ostensible solution to the nettlesome problem of the 45 million uninsured Americans and the 20,000 people who die every year because they don't have health coverage.

Forced insurance, also known as individual mandate, is the caveat for the insurance industry "concession" to stop refusing to sell policies to people with pre-existing conditions and dropping enrollees when they get really sick.

Never mind the dubious decision to bribe the insurance companies with public money. That's just the way it is since the politicians calling the shots have already decided that any option that ends our dependence on profiteering insurance companies, such as single payer, is not fit for public debate.

Ordering everyone to buy insurance, however, is a little messy. Especially in a deep recession when many are losing their employer coverage, premiums have soared four times faster than incomes in the past decade, and 62 percent of personal bankruptcies are now linked to medical bills.

To offset the cost of all that insurance people are being forced to buy, our legislators will provide public subsidies to low and moderate income individuals and families, which become a pass-through to the private insurance industry.

How to pay for this sweeping insurance bailout is the conundrum. Especially when your bill is rather fuzzy on how it will restrain what the insurers can charge. That's the problem vexing Massachusetts, the national model for this approach, which is now limiting enrollment and reducing covered services, such as dental care, because of the cost.

Presto -- the tax on employer benefits, a potential revenue stream of as much as $300 billion.

Despite the fact President Obama made his opposition to this tax a centerpiece of his campaign against John McCain. And despite the fact that taxing employer benefits just might prompt the massive disruption the Administration says is the reason for not considering single payer.

As the Boston Globe editorialized last fall, the tax would encourage young, healthy workers to reject their employers' taxable benefit and plunge into the private market, leaving employers with a more costly insured base of older, less healthy workers which would drive up their cost. "The likely result is many companies would drop coverage altogether," said the Globe. To which the Dallas Morning News added, quoting health policy wonks, this could "lead to the death of company-provided health plans."

But, look on the bright side, as in whose pockets get lined. If we can bankroll the banks, why not insure the insurance companies.

For those keeping score at home, that's another $300 billion for an fraternity whose 18 biggest members, such cuddly folks as Unitedhealth, Wellpoint, Aetna, Humana, and Cigna, made $44 billion in profits over the last three years. And whose 151 top executives collected just under a tidy $1.1 billion in total compensation (CNA/NNOC research based on SEC filings).

To soften the blow, the Democratic leadership says it will try to limit the tax to just the "Cadillac" plans, a euphemism for comprehensive coverage.

In other words, plans that are not skeletal, with thousands of dollars in deductibles and co-pays and massive gaps in coverage. The kind of plans that once taxed, younger, healthier workers are most likely to dump in favor of the bare bones, high deductible private plans while gambling they don't get sick and need the actual comprehensive coverage.

Or to put it another way, a penalty on employers who have actually been good citizens and provided their workers with comprehensive health benefits.

Which brings us to the final policy argument for the tax. Using the tax code to discourage the availability of comprehensive health plans except for the wealthiest Americans will promote the proliferation of even more junk insurance plans.

And, what happens when people have plans with limited coverage and high out of pocket costs? They put off doctor visits, immunizations for their kids, defer dental work, and skip other needed care.

Implement the tax on benefits and the 53 percent of Americans who told pollsters earlier this year that they or a family member had self-rationed care because of the cost the past 12 years will be remembered fondly as the good old days.

But, to the experts and policy wonks, that's a good thing. The reason for high healthcare costs, they say, is not insurance industry or drug company profiteering, it's "over utilization" of medical care. Be patriotic, don't go to the doctor.

So, by taxing healthcare benefits, we can all pitch in and contribute to healthcare reform. Don't you feel better already?

Does the Public Think Politicians Are Crying Wolf (Again)?

davej — Tue, 30 Jun 2009 22:36:24 GMT

Dave Johnson, Speak Out California.

A recent large headline in the San Jose Mercury News got me thinking. The headline was, "A dire warning from the Governor". (Online headline is different from the morning's print headline.) From the story, "Schwarzenegger said ... his threat ... is necessary to prod lawmakers into swift action."

I have to admit that even I rolled my eyes when I saw that -- even though I understand how serious the problem is. And this led me to think that maybe there is a "crying wolf" factor at work here. This has been going on now or a long time.

A few months ago the crisis was reaching a breaking point, dire warnings were issued, and most importantly the public was starting to pay attention. This triggered the leadership in Sacramento to do what I think was the worst possible thing: they came up with the fluffy budget compromise that "solved" the crisis and resulted in the failed May 19 Special Election. I believe the compromise was a mistake that broke the tension and led people to believe that the "crisis" was over, so they tuned back out.

I think the "chicken little" aspect of the whole affair kept people away from the polls in droves.
I am not faulting the Governor and other state leaders for headlines like thos and other warnings because the crisis is real. Our leaders all need to do whatever it takes to get people to pay attention, to realize this budget crisis is real and that everything that can be cut has been cut, that they really are going to have to let people out of prisons and close parks and still will run out of money anyway. Bankruptcy and all of its consequences looms. For real. The public has to get involved and do their job in this democracy.

But I can understand why most Californians have tuned out. I think part of this budget problem is that it has become the norm to use drama and fear to prod others into action. And not just with the budget. There are so many terrible problems hitting us from so many directions. The economy really did collapse, and we may be on the edge of another Great Depression. For real. This has been a headline swarm for months. Swine flu is real, but is not as lethal as it first appeared it could be. This was the headline swarm a few weeks ago. And of course Global Warming is real, and serious. It has been a headline swarm for years.

Those are real and serious problems. But at the same time there are so many manipulative, well-funded and sophisticated PR campaigns, usually from corporate interests, that use fear and/or other manipulation. Remember the headlines warning aobut possible terrorist smallpox attacks? Remember being told that Iraq was on the verge of hitting us with nuclear weapons? Remember duct tape?

So people just do not know who to trust and necessarily are becoming immune to drama.

California's big media outlets could do a better job of explaining the real problems facing the state, beginning by dispelling the idea that the state is just wasting taxpayer money and everything can be solved with a few painless budget cuts. They need to do this in a serious, respectful way, with comprehensive investigative reporting. If print media won't do that, they should close their doors -- they aren't doing their jobs and aren't helping anyone anymore so they should let their advertisers support a medium that helps democracy rather than hinders it. If broadcast media can't do that, they should relinquish their broadcast licenses to others who will.

The poor, elderly and disabled have already suffered the cuts. They understand that this is for real. So maybe we need the crisis to hit home so (middle class) people can also understand that it is for real - this time.

Click through to Speak Out California.

Calitics - Recommended Diaries

Go Ahead, Tax those Benefits, it's Central to the Health Plan

Does the Public Think Politicians Are Crying Wolf (Again)?