Obamacare's Biggest Threat Yet

[Purveyor]

DEC 17, 2015 9:00 AM EST
By Editorial Board

After dozens of futile votes to repeal Obamacare, Republicans in Congress may have finally found a winning strategy: Delay or suspend the taxes that pay for the program, and enfold the provisions in a larger spending bill that has to pass.

Even congressional Democrats are on board with the plan -- at least this year. But these taxes are crucial to the success of health-care reform, and Democrats need to ensure the delays and hiatuses remain temporary.

Each of three taxes targeted in the spending bill is defensible on its merits. The first, the so-called Cadillac tax on high-cost employer-sponsored health plans, does more than just help to pay for Obamacare; it's also meant to help control health-care costs by giving employers an incentive to direct less compensation toward health benefits and more toward wages. The design of the tax could be improved, but the goal of lower costs is beyond dispute. By delaying the tax for two years, the bill sets back that goal.

The other Obamacare taxes frozen by this deal don’t do as much to promote efficiency, but they're important in helping to pay for the law. One of the effects of Obamacare has been to increase the revenue of many health-care providers. So the law taxes some of that new revenue -- including a 2.3 percent tax on sales of medical devices and an annual fee on health insurers. The spending bill lifts the device tax for two years and the insurance tax for one.

If those three taxes are delayed or lifted only for the time agreed to in the omnibus bill, it will cost the federal government an estimated $30 billion in lost revenue over two years. That's a big if. Once Congress suspends a tax, it's very hard to reinstate it. Permanently repealing these three taxes would cost $257 billion by 2025.

One of the chief Republican arguments against Obamacare has been that, contrary to official projections, the law wouldn't pay for itself. After five years, that warning has failed to come true. Now the law's opponents are changing the law to match their predictions.

more...

http://www.bloombergview.com/articles/2015-12-17/obamacare-s-biggest-threat-yet

[saturnsring]

1. it's also meant to help control health-care costs by giving employers an incentive to direct less c

it's also meant to help control health-care costs by giving employers an incentive to direct less compensation toward health benefits and more toward wages. but they wont they will just cut down the health coverage if not get rid of it al together

[JayhawkSD]

2. I'm not sure I get the point of this.

Raising taxes on health care to reduce the cost of health care.

"it's also meant to help control health-care costs by giving employers an incentive to direct less compensation toward health benefits and more toward wages."

So who does it help? It certainly does not help the employee.

Bear in mind that the health care benefit is not subject to income tax (I think part of it might be under certain circumstances), and even if Congress made it subject to income tax, it is not subject to payroll taxes which includes Social Security (both employee and employer shares), unemployment tax, workers comp tax, and in many states disability insurance tax.

So if the employer paid $5000 less for insurance and raised the salary by the same amount, the employee is poorer by almost 30% of that $5000, and his out-of-pocket cost for health care in increased. But that's okay because only rich people have that kind of plan, so we're perfectly happy to screw them.

"One of the effects of Obamacare has been to increase the revenue of many health-care providers. So the law taxes some of that new revenue -- including a 2.3 percent tax on sales of medical devices..."

I had pneumonia recently and my doctor wanted me to be on oxygen when he sent me home. The insurance, however, would not approve the cost of a home oxygen generator, so he ordered me discharged to a skilled nursing facility. Talk about raising the cost of health care!!!

In the ensuing discussion a few facts got brought out. Had I been on Medicare the generator would have been approved. The insurance company had formerly approved the generator under these conditions, but had changed the policy two years ago due to the increased cost of the generator. (They did finally persuade the insurance company to let me go home.)

Does Congress really think that fees on insurance companies and taxes on manufacturers are not going to be passed on the the consumer in the form of increased prices for the goods and services in question? Thereby, of course, raising the cost of health care? If they really think that then I have a really lovely bridge in Brooklyn that I would like to sell to them.