There is a middle-class tax time bomb ticking in the Senate’s version of HCR - By BOB HERBERT

[kpete]

A Less Than Honest Policy

By BOB HERBERT
Published: December 28, 2009

There is a middle-class tax time bomb ticking in the Senate’s version of President Obama’s effort to reform health care.

The bill that passed the Senate with such fanfare on Christmas Eve would impose a confiscatory 40 percent excise tax on so-called Cadillac health plans, which are popularly viewed as over-the-top plans held only by the very wealthy. In fact, it’s a tax that in a few years will hammer millions of middle-class policyholders, forcing them to scale back their access to medical care.

Which is exactly what the tax is designed to do.

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.

more:
http://www.nytimes.com/2009/12/29/opinion/29herbert.html?_r=2&hp

[Donnachaidh]

1. link? n/t

[tsuki]

6. Here

http://www.nytimes.com/2009/12/29/opinion/29herbert.html?_r=2&hp

[timeforpeace]

19. Herbert really nails it. Devastating expose'.

[defendandprotect]

40. Don't have time to read this right now . . . anyone breaking out a few points?

[dkf]

2. Atrios sez its the Stupidest part of HCR.

As Herbert says, the "cadillac" health insurance tax plan is both the worst part of the plan and the biggest fantasy. None of the benefit reductions are going to be converted to wages.

-Atrios 09:20

http://www.eschatonblog.com/

[BeFree]

3. Tax the rich - share the wealth?

Sounds like a plan. How else do we pay for universal care?

[we can do it]

4. Universal Care? What Country Are You In?

[BeFree]

7. the US, silly

We don't have it, but were gonna get it, but first we gotta figure out how to pay for it. Tax the rich is a plan.

[chimpymustgo]

21. Please read the article. This is taxing the MIDDLE CLASS.

-edit-

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.

-edit-

[BeFree]

23. Oh?

Which 20%? The employed?

Man, I wish I had the job to be in that 20%.

[Edweird]

34. No, you're not getting single payer. Not with this plan. It is the opposite of single payer.

Single payer means the end of insurance companies. This plan gives them a government mandated monopoly. Single payer would bolster the existing single payer program we have now - Medicare. They are cutting half a billion from it. So, all the new people that will suddenly qualify for Medicare will find it unfunded. This is not a good deal. Reagan would have LOVED it.

[ljm2002]

29. The House plan did tax the rich...

...directly.

This plan taxes the middle class. No coincidentally, the tax will target so-called "cadillac" plans that were negotiated by unions, often to offset their agreements to forego wage increases.

Please note, the term "Cadillac plans" was coined specifically to incite people to say "Yeah, why shouldn't they get taxed? Their plan is better than anything I have!". In other words, not only have the powers that be succeeded in weakening the unions over the years, now they have succeeded in making people hate them for their successes. Because fewer and fewer people actually belong to unions, now the majority can be whipped up into outrage at those who do belong to unions, against the paltry successes they have been able to rack up. Divide and conquer wins again.

No matter how you slice it in Congress these days, the little guys get screwed while the fat cats get their bonuses.

Go figure.

[dsc]

5. I can easily see it 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.

[wilt the stilt]

8. the problem with hard cost

figures is that cost of living increases are never built in. This happened with tort reform in CA. They are still using the same dollar figure from 1976.

[Romulox]

9. This is another attempt to destroy the UAW, among others. nt

[chimpymustgo]

22. Exactly. The final nail in coffin.

:puke:

[Xithras]

38. The party elite have decided that unions are no longer allies.

Let's hope that organized labor teaches them a lesson they won't soon forget.

[midnight]

10. A tax that surely would make Ebenezer Scrooge smile...

[laughingliberal]

11. A lot of us in our 50's pay close to that now for coverage and some pay more

A couple I know has had their rates raised to $2000 per month this year and it is decent coverage: 80/20 with co-pays and deductibles. Good coverage, yes but over the top? No. The first glaring defect of this part of the plan is it is based solely on the price of the premium which is the fault of the insurance company, not the consumer.

And here's the part from the article that really pisses me off. After noting that no one will, actually, pay the tax as they will just switch to plans with lower premiums and higher out of pocket expenses he goes on to report:

<snip> Proponents say this is a terrific way to hold down health care costs. If policyholders have to pay more out of their own pockets, they will be more careful — that is to say, more reluctant — to access health services. On the other hand, people with very serious illnesses will be saddled with much higher out-of-pocket costs. And a reluctance to seek treatment for something that might seem relatively minor at first could well have terrible (and terribly expensive) consequences in the long run. <snip>

Does anyone else see that this is the Bush "ownership society" plan. If people have to pay more out of pocket, they'll be better stewards of the money was the thinking. Never mind they are unable to be better stewards of their health. This really sucks, more than I can say.

[glitch]

16. It is especially moronic in healthcare, when preventative care saves lives AND dollars. nt

[TwilightGardener]

12. I am wondering if one purpose of that tax is to keep the overall

cost of policies down (or stable) by discouraging policies that exceed the upper limit where the tax threshold is encountered? I would imagine the costliest policies are skewing the price upwards for everyone else. The insurance companies will keep upping the ante, seeing if employers will keep going along. In most commerce, there is a price point for a product beyond which most people won't pay. Perhaps this can help establish that price point for the insurance industry--discouraging them from raising prices much beyond the tax, because employers will seek other insurance providers who will offer the same level of coverage for less than the tax threshold? Or, it'll just be a fucking mess. That could happen too, LOL.

[n2doc]

15. My prediction- deductibles will rise

As the costs of the plans get close to the threshold- the deductibles will simply go up to increase the health ins. co's profits. Eventually we will all have plans that pay for nothing less than the rare catastrophic illness, but which we have to pay a big chunk of income each year for. All minor illness and doc visits will be out of pocket. People are just gonna loooove that....

[TwilightGardener]

17. That's certainly possible--I am interested to see if insurers actually

try to scale back coverage/increase out-of-pocket costs on a $23,000 policy, or if coverage will remain stable at that price for a while. Maybe Congress should lower the total out of pocket liability if they try to gouge through deductibles--or as someone else suggested, tie the upper limit before the tax to inflation. It will probably have to be revisited.

[freddie mertz]

13. My wife was very ill two years ago. Our HC plan saved her life.

If this goes through, we will probably lose this coverage through tax increases and benefit cuts.

You want me to applaud?

"If you like the coverage you have, you can keep it!"

Add that to the litany of lies.

[WCGreen]

14. They could fix it by indexing the damn thing to inflation....

[Igel]

26. No, they couldn't.

They could fix this problem, but the budget numbers that are trumpeted rely upon this. Crucially.

Lots of people have said that the assumptions behind the HCR bill are funny. That they don't make sense. But that the CBO has to assume fairly moderate assumptions if the bill is implemented as written. It doesn't matter that it's impossible as written, or that it will certainly need changes.

Meh.

As with everything else, people argue about the surface claims and implications of those claims. They seldom bother to question the assumptions behind the claims, whether they're statistical, economic, or anything else.

[WCGreen]

43. As a political animal, I was looking at minimizing the political fallout

[mzmolly]

18. This does need to be rectified in committee.

eom

[gratuitous]

20. Not to worry

The way our domestic economic policies are decimating the middle class, we won't have to worry about this because we'll all be below the poverty line, watching overrich millionaires argue with each other on the teevee how best to relieve us of our last few shekels. But at least we're not some socialistic government-run hellhole like Canada!

[amborin]

24. Devastating Comments to his article: Wow!

".....President Obama, who is fighting for this tax like he never did for the public option. There are many alternatives that don't amount to a huge middle class tax increase.

For example: (1) let workers cash out their current benefits on a pre-tax basis, (2) only tax plans which the Secretary determines to be luxury plans, or (3) tax the benefits of people making over $250,000 a year.

The truth is our leaders are eyeing this tax because it will eventually yield hundreds of billions of dollars a year while barely inconveniencing wealthy campaign donors. The upshot is that the middle class is paying for taxcuts for the rich, unnecessary wars, and Wall Street bailouts. It's outrageous and we the people need to tell Obama and the Democrats to think again."

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

[Tierra_y_Libertad]

25. Too bad they didn't keep that bomb in their underwear.

[Igel]

27. I rather liked Gruber's WaPo article.

The ultimate assumption was that all decisions to not tax something, even if "something", that income, was never taxed, involve a government subsidy.

As my macroeconomics prof told me so many decades ago, the ultimate assumption that is often made is that the US government owns, through its taxing authority, all wealth and all income and it merely lets us keep some of it.

That's so not 1787, and even less 1776.

[David Zephyr]

28. My healthcare policy cost over $8,500 a year BECAUSE of my age. It's hardly a "cadlillac"

Americans over 55 years old will be hit hard with this tax and they are the ones being screwed already by the insurance companies as they just try to keep living until they are 65 to get Medicare.

My exact policy only costs $200 for younger workers while mine is $700 a month because of my age (no pre-existing conditions). I have co-pays, deductibles and no dental. Some cadillac plan.

As Americans learn the dirty truths hidden in this monopoly give-away, there will be hell to pay because it is a 100% Democratic Bill.

[Nikki Stone1]

30. Exactly

This bill is not written for the good of the people. It is written for the good of the insurance industry and Wall Street.

[laughingliberal]

35. There you go! Tying this to the cost of the premium is one more attempt to let the insurance

industry off the hook. Don't, for God's sake, point out that the policy is overpriced, gouge the consumer who is already being gouged by the industry.

[David Zephyr]

45. Your point is a good one.

The product is overpriced and the product isn't as good as it should be.

I'm not letting them off the hook, I want to educate those that have insurance how they are going to be screwed, too.

What a shitty bill the President is itching to sign.

[dsc]

36. actually you are exempt from the tax or at least partially

they do give people over 55 more leeway on the cost. But if they don't index you will eat through the lee way.

[LWolf]

31. I'd love to know who gets to define "cadillac." nt

[laughingliberal]

42. Looks like the Senate defined it and it is solely defined by the price of the premium

$8500 per year for an indidual and $23,000 a year for a family. A few years ago I had a plan where my employer covered me but I had to pay the cost of my husband's premium. It was $7200 per year. And that was 2004. I am sure that it's reached the threshold by now. It was just average coverage. In other words the coverage that premium buys now it what most people who had coverage through an employer had 5 years ago. Now, it's gold plated. It is total BS and we need to fight it like hell.

[LWolf]

44. So I have a "cadillac" policy, which I can't afford to use,

because there's nothing left in the budget for copays and deductibles.

So I'll go from paying a partial premium (my employer pays the rest) to paying a partial premium, AND income tax on the part my employer is paying....and I still won't be able to afford actual CARE.

[EmeraldCityGrl]

32. Sounds like The Alternative Minimum Tax...

that was originally targeting the high income households. AMT is now payed by many average income families. Not the original intention.

[MadHound]

33. Yep, the middle class is going to be ravaged by this so called "reform"

I'm a teacher, and while our pay is low, the unions try and make up for it with real good benefits, including good health insurance. This sort of taxation will kill teachers and others.

This bill is just a disaster, it needs to be killed, but it won't be. And ten years from now the left will, once again, get to tell the Democrats "Hey, I told you so." By then it will be too late.

When will the party learn that the left is rarely wrong?

[Generic Other]

37. And there goes the election

I feel sorry for any Democrat running on this tax benefit.

[Beetwasher]

39. Ezra Klein Responds

http://voices.washingtonpost.com/ezra-klein/2009/12/attacking_the_excise_tax_--_an.html#more

[defendandprotect]

41. Here's one point --

The tax on health benefits is being sold to the public dishonestly as something that will affect only the rich, and it makes a mockery of President Obama’s repeated pledge that if you like the health coverage you have now, you can keep it.

The taxes also start next year, but no benefits until 2013???

Is that right?

[Faryn Balyncd]

46. K and R