Bob Herbert: A Less Than Honest Policy (middle-class tax time bomb in HCR bill)

[highplainsdem]

http://www.nytimes.com/2009/12/29/opinion/29herbert.html

Bob Herbert's latest column is about the devastating effect the tax on so-called Cadillac health plans will have.

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.

Herbert points out that proponents of the tax say it will raise $150 billion over 10 years, but only 18% of that will be raised directly by taxing those policies, since the tax will force many employers and individuals to switch to less expensive plans offering less coverage.

If even the plan’s proponents do not expect policyholders to pay the tax, how will it raise $150 billion in a decade? Great question.

We all remember learning in school about the suspension of disbelief. 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 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.”

A survey of business executives by Mercer, a human resources consulting firm, found that only 16 percent of respondents said they would convert the savings from a reduction in health benefits into higher wages for employees. Yet proponents of the tax are holding steadfast to the belief that nearly all would do so.

As Herbert says, this makes a mockery of Obama's pledge that if you like the coverage you have now, you can keep it. And it's being promoted dishonestly as something that will affect only the rich.

[AllentownJake]

1. Of course it does

But the revisionist will run in to say he never did that, it was the Senate's fault, or some other fucking nonsense.

[ProSense]

2. The Truth on Health Care Reform and Taxes

The Truth on Health Care Reform and Taxes

Second, the excise tax levied on insurance companies for high-premium plans, the so-called "Cadillac tax," will affect only a small portion of the very highest cost health plans – a total of 3% of premiums in 2013. The vast majority of health plans fall below the thresholds set in the Senate plan and would be completely unaffected by the provision. And those that are above the threshold would only face an excise tax on the generally small portion of the plan that exceeds the threshold. As a result, based on analyses by the Joint Committee on Taxation, only about 3% of premiums will be affected by this provision in 2013. In addition, the Senate plan provides special protections to plans held by workers in high-risk professions – like police and firefighters – as well as by those over 55.

[Hannah Bell]

4. "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"

[ProSense]

9. That's not what the CBO said

The reductions in premiums described above also exclude the effects of the excise tax on high-premium insurance policies offered through employers, which would have a significant impact on premiums for the affected workers but which would affect only a portion of the market in 2016. Specifically, an estimated 19 percent of workers with employment-based coverage would be affected by the excise tax in that year. Those individuals who kept their high-premium policies would pay a higher premium than under current law, with the difference in premiums roughly equal to the amount of the tax. However, CBO and JCT estimate that most people would avoid the cost of the excise tax by enrolling in plans that had lower premiums; those reductions would result from choosing plans that either pay a smaller share of covered health care costs (which would reduce premiums directly as well as indirectly by leading to less use of covered medical services), manage benefits more tightly, or cover fewer services. On balance, the average premium among the affected workers would be about 9 percent to 12 percent less than under current law. Those figures incorporate the other effects on premiums for employment-based plans that were summarized above.

link

The CBO also doesn't take into account the other protections in the Senate bill.

[Hannah Bell]

15. "an estimated 19 percent of workers with employment-based coverage would be affected by

the excise tax in that year."

so they'd have to enroll in plans with lower premiums to escape the tax:

"plans that either pay a smaller share of covered health care costs...manage benefits more tightly, or cover fewer services."

spin, spin, spin.

The CBO report *did* say it--it just added that some would opt to change to *worse* policies to avoid the tax.

Really, your spin is *so* blatant.

[ProSense]

17. No, you simply refuse to take all the facts into consideration.

First, the statement about the 19 percent is an assumption based on a trend in cost. Second, there is no reason to believe the trend will play out given the caps and other cost controls. Third, there are plans that will be protected.

[Hannah Bell]

19. The report said it. Period. You said it didn't. False.

[Zhade]

52. Lies just like obama.

NT!

[Zhade]

51. You're kidding, right? WHAT controls?

NT!

[truedelphi]

35. Thank you for providing some reality to the discussion n/t

[sabrina 1]

43. I wouldn't use that paragraph as a defense of this bill.

However, CBO and JCT estimate that most people would avoid the cost of the excise tax by enrolling in plans that had lower premiums; those reductions would result from choosing plans that either pay a smaller share of covered health care costs (which would reduce premiums directly as well as indirectly by leading to less use of covered medical services), manage benefits more tightly, or cover fewer services. On balance, the average premium among the affected workers would be about 9 percent to 12 percent less than under current law.

It proves again that the claim that millions more will be covered is deceptive. They will buy cheaper premiums to avoid being taxed and because they cannot afford decent coverage. As has been claimed over and over again, and as your own paragraph confirms, that will prevent them from even using this coverage since the co-pays will be so high.

This is not 'covering millions more people'. It's making them pay for what they get now for free, little or no health care.

But the Private Insurance Corps are smiling.

[jbnow]

26. I think we are all looking at it wrong. The 40% excise tax

is on the insurance companies for the amounts above the 23K or 8K. not on the employer or the worker.

Of course the insurance company will not eat that. But if they raise the premiums on the additional premiums too on the people getting those plans they would have to pay a 40% excise tax on that additional money and on and on

So if I were an insurance company I'd raise the premiums on all lower costs premiums as well, thus everyone would be penalized.

This is a dumb idea. If they think these should be taxed then treat the excess amount as regular income for the person who receives it and raise the amount at the average percentage premiums go up.

Or tax the excess for people that earn over 250,000, still as part of their income.
I am thinking wall street gets these plans. I know someone who was concerned because their plan would cover only 6 in vitro fertilization attempts. I am not mocking them, just saying for it to be covered at all that is likely a Cadillac plan.

If I remember correctly they do increase the annual out of pocket cost limit over time, why wouldn't they increase the amount that triggers an excise tax. (At least the House bill does) Still an excise tax method is dumb.

Since I am bitching I will also compliment Senate for their better out of pocket limits than house bill has. Their top rate for single is a little higher (5,900 vs 5,000) but it goes down with lower income until it gets to a 2,000 max for singles with income under about 22,000. (At that level their premiums would be 100% subsidized too) This includes all co-pays and deductibles... no one ever has to pay more than the limit in a year.
I know that is still a lot to them but the cap both bills have will prevent bankruptcies that even insured people can have happen when there is a serious illness.

[bertman]

10. This rosy assessment is straight from The White House Blog. I'm sure it's a careful and

accurate analysis.

[Hannah Bell]

3. should be read, bush-style budgeting.

[highplainsdem]

29. Yes, people should read the entire column.

[Nikki Stone1]

5. No cost controls mean steadily increasing taxes to cover subsidized mandates.

.

[Greyhound]

55. Which will in turn, be used to reduce care and the so-called subsidies.

Meanwhile, they are already starting in on the cuts to Medicaid/Medicare and the SS axes have already come out.

I swear to FSM, has the ability to see 5 minutes into the future become a lost art?

"...and now they’re coming for your Social Security money. They want your fuckin' retirement money. They want it back so they can give it to their criminal friends on Wall Street, and you know something? They’ll get it . . . they’ll get it all from you sooner or later cause they own this fuckin' place." - George Carlin

[FrenchieCat]

6. I think that part of the bill will be changed in conference,

and they will go with the house side version for funding; Individuals with income over $500,000 and families with incomes over $1 million would pay a 5.4 percent surtax.


I don't know who came up with this Cadillac tax plan funding;
was it the Senate Finance Committee?

[highplainsdem]

11. Obama is in favor of taxing Cadillac health plans (link):

http://www.reuters.com/article/idUSTRE5BG46S20091223

[FrenchieCat]

22. Well, I better drop my support for him and go march with the Teabaggers then!

or something like that.
--------------

Guess I'll be googling and gathering my reading up
on this Cadillac plans and this Senate bill tax tomorrow,
so I can formulate my letters and send them out.

I just will make sure I know what I'm talking about....
in particular when I send my hard copies to members
of the CBC (the chairman who is my very own Rep), and email the President,
and my senators, and the media.

If there is anything that can be done systematically and effectively,
the time is now, as we near conference.

What I won't do is simply scream about it on the Internet
over and over again.

[jbnow]

I'd want to see more of the quote than that to see if he is agreeing

with THIS plan. As you know the quote says

"Taxing Cadillac plans that don't make people healthier, but just take money out of their pockets because they're paying more for insurance than they need to -- that's actually a good idea and that helps bend the cost curve,"

To that I say "well duh"
So what does he say next
"and that is what this plan will affect"
or
"but we have to be careful before we penalize those who negotiated for excellent plans"
or
"I like sweet potato pie"

It just has that pne quote from which we can assume nothing.

[jbnow]

24. I'd want to see more of the quote than that to see if he is agreeing

with THIS plan. As you know the quote says

"Taxing Cadillac plans that don't make people healthier, but just take money out of their pockets because they're paying more for insurance than they need to -- that's actually a good idea and that helps bend the cost curve,"

To that I say "well duh"
So what does he say next
"and that is what this plan will affect"
or
"but we have to be careful before we penalize those who negotiated for excellent plans"
or
"I like sweet potato pie"

It just has that one quote from which we can assume nothing.

[shadesofgray]

32. His statement trying to justify this travesty is unbefuckinglievable.

[dkf]

12. That is the senate solution to cost control.

Yeah sure.

[TheKentuckian]

18. Yeah, it's the Max Tax from the Finance mark

The Senate bill is just rehash of that. I've been trying to get people to think about funding structure but everyone is so focused on a public plan that all the other screwjobs don't get airplay at all.

There are effective ways of regulating and getting cost as well as price controls without a public plan but thats all been utterly shunned and now that we get a market based bill it is really weak on any sort of reforms of any sort be they left, center, right, or whatever. This is a corporate bill not just in structure but in funding mechanisms too.

[Beetwasher]

39. Correct

n/t

[laughingliberal]

48. Yes, Senate Finance gang of six assholes. nt

[grantcart]

7. there is a fallacy in his main point

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



There can be no more "steadily rising costs" of health care. 8-10% annual increases will mean that businesses will cut back coverage or drop it altogether. The idea that additional health care costs can simply be passed along is not based on reality.

The status quo with steadily rising health care costs is an option that is not sustainable in any economists point of view.

[FrenchieCat]

8. Do you have doubt that they take this route for the portion of the funding though......

compared to taxing wealthy Americans, which is in the House bill?

[bertman]

13. In the last two years, my premiums have gone up 33%. What is going to slow that rise

with insurance companies having to take on anyone who has a pre-existing condition?

Is there a provision in the bill for that?

[truedelphi]

36. I hope someone knows about that. I

Have a lot of problems with the fact that over the last two years, most people have seen a vast rise in their premiums as the Big Insurers girded themselves for the possibility of premium increases being regulated.

But of course, the DLC doesn't care to actually reform the Big Insurers, or to regulate anyone, so whether anyone will tackle the premium issue, I sure don't know.

[Beetwasher]

37. Yes, The OPM Administered Exchanges Will Offer Non-Profit Insurance Options

As well as competition in places that NEVER had competition for insurance carriers before. There will be no more regional monopolies.

The non-profit option on the exchanges will create downward pressure on pricing. The possibility of paying taxes on more expensive plans will put downward pressure on pricing.

[dkf]

14. Exactly who gets taxed anyway?

The worker or the employer? If it is the worker why would the employer care what taxes are involved? If it is the employer then they will definitely go bare bones especially if other employers all downgrade similarly. And as for employees picking the cheaper option for the first time in my employment history i gad no choice of insurance company. It was either take it or leave it. I was not happy

[Political Heretic]

20. Since when does business function by rules of sanity?

"The status quo with steadily rising health care costs is an option that is not sustainable in any economists point of view. "

Since when has that stopped anything? Unless steadily rising costs are prevented by legislative mandate, they will rise steadily, whether it is unsustainable or not.

[TheKentuckian]

23. Its not sustainable but neither is almost anything we do and they've been doing it for 20 years

with this bill they'll just rob the treasury for their loot for as long as they can buy enough pols, which come pretty cheap by their standards.

Plus, now if employers drop then they still can eat well off the exchange.

[sabrina 1]

44. Your last sentence is true.

The main reason for that is that we have a very big For Profit industry in the middle of our Health Care system that we don't need and cannot afford.

The solution was simple. Like every other industrialized nation we need to move far, far away from a for-profit health care system and start the process of the far less expensive and far more equitable system of a National Health Care program. A good start would have been a choice for people, such as extended Medicare or a Public Option.

Mass. has a system very similar to this bill which was also meant to keep down costs. In just three years costs have gone up each year and fines have been tripled. Imagine what they'll do with this bill.

If someone can explain to me what function this Private Insurance Industry serves, that cannot be served better, for far less money, and more fairly by the Medicare system, I'd like to hear it. All I see them as are vultures trying to keep their place at the public trough.

[Jim Sagle]

16. Any minute now, a squad of five buck an hour DLC hogwash dispensers will

flap its way to this thread and denounce Bob Herbert as a white racist.

:rofl::rofl::rofl::rofl::rofl::rofl::rofl::rofl:

[ima_sinnic]

27. lol!

we call them Rahmbaggers now

:rofl:

[Dragonfli]

42. ..

:rofl::rofl:

[dysfunctional press]

21. Dems made the mistake of thinking that someone happy to HAVE insurance was happy WITH it...

most of the people i know(that have insurance) think that their insurance sucks- but they're damn glad to have SOMETHING. they're expecting to get something out of this bill- and there's nothing good in it for them.

some of the few people i know who ARE happy with their insurance are union members in the construction trades- and the reason they have such good insurance is because of how when they negotiated labor contracts with the building contractors, they gave up money on their paychecks in order to have more money going to health and welfare for themselves, their families and their fellow union members and their families.

and they are NOT happy with the idea of being singled out and taxed on those benefits that they fought for.
and they are NOT going to vote for obama(or any other democrat) for potus in 2012.

this is a major miscalculation by the democrats.

at least i hope that's the explanation.

[AzDar]

25. K & R

[nightrain]

28. Obama also campaigned on "no new taxes on the middle class"

[laughingliberal]

49. Well, at least, that's what I thought he said. Guess he can say he meant no new income taxes

and say this isn't an income tax. Or, perhaps, we were hallucinating again and he never campaigned on that.

[dsc]

30. I can easily see this tax hitting me

My benefits (medical and dental) totaled 4400 last year. Assume 10% medical inflation per year. by 9 years from now, 2018, my benes total over 10k. For 8% we are at 8795. In either case I am paying that tax. I hardly have a Cadillac plan. I have a deductible and 80/20 up to the first 1000 out of pocket. My dental insurance is even worse. Oh, and I will be single in 2018 since I am legally barred from being married.

[Karmadillo]

31. Single payer as soon as we have a Dem Congress & White House. OK. A public option and no mandate. OK

A mandate, but we'll have that public option. OK. No public option, but at least you can keep what you have. OK. No single payer, no public option, mandates, and we'll tax what you have. Mission Accomplished, Suckers! But we'll fix it down the road if you agree to vote for us in 2012. Honest.

[sabrina 1]

45. Lol, good post. That's about it.

You forgot one more little sliver of hope that was dashed as quickly as it reared its little hopeful head. Extended Medicare to people 55 and over! I know, you could easily have missed it, it came and went so fast. Joementum took care of it before we could indulge in too much hopiness.

[Karmadillo]

46. Yikes! How could I have forgotten the medicare extension that was going to lead to single

payer (except we couldn't really say so because we didn't want the Republicans to get wise to our secretiness)? Thanks for the addition to the list.

[sabrina 1]

47. Lol, like I said, it was dealt with swiflty

so the withdrawal symptoms weren't as bad as with the others. So don't feel bad! :-)

:kick:

[Zhade]

53. My sigline says it all.

NT!

[senseandsensibility]

33. kick

and thanks for posting,highplainsdem.

[amborin]

34. outstanding column, thanks for posting, already rec'd it!

[highplainsdem]

40. Thanks for the rec, amborin!

[defendandprotect]

38. kick

[glitch]

41. FUBAR nt

[NoUsername]

50. So why aren't the Bush tax cuts being repealed to pay for HCR?

After all, IIRC, that was a big part of his campaign platform. So where the hell does the HCR bill include the repeal of the Bush tax cuts.? Nowhere, from what I have read.

For those of you that want to flame me for even bringing this up, please extend me the courtesy of including a link to the exact clause in the House and/or Senate bill that addresses this issue. After all, screwed-over poor and middle-class Americans want to know.

[Zhade]

54. Because obama is a fucking liar, that's why.

NT!

[NoUsername]

56. Ha! Yeah, that's it in a nutshell. n/t.