Wednesday, December 30, 2009

Buyer Beware...

As the health care debate continues, more fire is being directed at it from the left.  "Read the Bill" has been the rallying cry of the right and their near historic lock step negativity is now taken for granted.  As previously posted the GOP has removed themselves from the debate.  The real debate is happening in the Progressive World.  Just today via Glenn Greenwald and Bob Herbert of the New York Times, I read about the middle class trap that is being set by this legislation.  Evidently the biggest hit (again) will be on the middle class by way of the so-called "Cadillac Plans" tax.  The problem is of course that more and more of us will be swallowed up by this new tax bracket and will be forced to either pay the tax or reduce our health care benefits to avoid it.  Not a pretty scenario.

The tax would kick in on plans exceeding $23,000 annually for family coverage and $8,500 for individuals, starting in 2013. In the first year it would affect relatively few people in the middle class. But because of the steadily rising costs of health care in the U.S., more and more plans would reach the taxation threshold each year.

Within three years of its implementation, according to the Congressional Budget Office, the tax would apply to nearly 20 percent of all workers with employer-provided health coverage in the country, affecting some 31 million people. Within six years, according to Congress’s Joint Committee on Taxation, the tax would reach a fifth of all households earning between $50,000 and $75,000 annually. Those families can hardly be considered very wealthy.

Of course the legislation expects employers to use the savings to raise wages of workers so that they can keep their level of care.  Not so fast says Herbert:

This part of the Senate’s health benefits taxation scheme requires a monumental suspension of disbelief. According to the Joint Committee on Taxation, less than 18 percent of the revenue will come from the tax itself. The rest of the $150 billion, more than 82 percent of it, will come from the income taxes paid by workers who have been given pay raises by employers (emphasis mine) who will have voluntarily handed over the money they saved by offering their employees less valuable health insurance plans.

Can you believe it?

I asked Richard Trumka, president of the A.F.L.-C.I.O., about this. (Labor unions are outraged at the very thought of a health benefits tax.) I had to wait for him to stop laughing to get his answer. “If you believe that,” he said, “I have some oceanfront property in southwestern Pennsylvania that I will sell you at a great price.”

Perhaps this is what Newt Gingrich has discovered in the bill that is causing him to giggle with glee and enthusiastically advise all GOPERs to run on the repeal of health care in the '10 elections.  Frankly, from the sound of this one piece in the NYT, He might have a point. So far though, Democrats can point to all the true reform contained in the bill and be equally sure that the electorate will not choose to reject it.

Can the funding problem be fixed in conference committee?  Can another way to pay for reform be found? We'll see but meanwhile, I think we have yet another forceful argument for buying the sled that will put us on the slippery slope to single-payer,  sooner the better.  The question still remains, support the current bill or kill it?  Buyer beware, but stay tuned.

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