Diary

The truth begins to seep out about health care reform costs

The New Republic has a piece today about health care costs. It’s interesting to see how much things have changed since the campaign.

To remind you, Obama promised the average family they’d save a couple hundred dollars a month if he got elected.

Barack Obama and Joe Biden’s plan strengthens employer–based coverage, makes insurance companies accountable and ensures patient choice of doctor and care without government interference. Under the plan, if you like your current health insurance, nothing changes, except your costs will go down by as much as $2,500 per year. If you don’t have health insurance, you will have a choice of new, affordable health insurance options.

The Cohn article starts out saying conservatives are lying, but then confirms they are right before finishing the paragraph.

With Congress back in session, health care is at the top of the political agenda. And, already, you can hear the opponents of reform making a familiar argument: It will mean huge new taxes for you, even if you’re part of the middle class. Although they’re exaggerating, conceptually they have a point: Health reform could mean slightly higher taxes for some middle-class people.

Let’s see… If I was expecting to pay $2,500 less and instead can expect to pay “slightly” higher taxes, how does that not translate in “huge” new taxes when you put them together?

Ah but don’t worry. Like entitlement plans, this is an “investment” that will save you money — some day far off in the future.

But it will probably take years for those savings to show up. And until that happens, the government has to find some way of underwriting the expanded public programs and subsidies to people buying private insurance–in all, at least $1 trillion over the next decade, according to the best available estimates. Some of that money (at least half) will have to come from taxes. And, almost certainly, some of those taxes will have to come from the middle class–including, perhaps, people like you.

Hmmm. If half of the trillion dollars comes from taxes, I wonder where the other half will come from. Let me guess — probably the ubiquitous closing of loopholes, ending fraud/waste/abuse, etc. type claims no doubt. That never quite seems to happen, so we already know our “slight” tax increase will be doubled. Does that make it “moderate” instead of “slight”?

Okay let’s see some details.

One idea under discussion is to limit the tax break for more health insurance benefits, a move that would hit people–like older, unionized workers–whose employers give them blue-chip coverage. Another proposal would slap new taxes on tobacco, alcohol, or high-sugar food. Policy wonks like to call this a “twinkie tax.” (Another option would be a so-called Value Added Tax, which acts like a hidden consumption tax, but that’s apparently not under serious consideration.)

So VAT is off the table (for now, maybe), so that leaves yet another “sin” tax as one option we KNOW will be used. You know, once the price of cigarettes gets to about $100 a pack I bet all our troubles will be solved. The other option hits employees who get good health care coverage from their companies. But wait, Obama said that other than saving a few grand a year, those people wouldn’t see anything change, right? Don’t worry be happy.

To be clear, with either the tax change on health benefits or the Twinkie Tax, the actual financial hit from new taxes would be pretty modest–most likely a few hundred dollars a year, and less than that for the less affluent. And, as a bonus, raising either of those taxes would help accomplish a worthy policy goal. Most economists agree that it’s a bad idea to subsidize overly generous health plans, since it encourages people to purchase more coverage–and, ultimately, consume more medical services–than they’d normally find worthwhile. And most public health experts, to say nothing of most wise parents, agree it’s a good idea to discourage smoking, excessive drinking, and the guzzling of soda pop.

So the “slight” tax increase is now called a “modest” tax increase, and that’s before doubling it for the other half of the cost and adding back in the $2,500 we’re not going to be saving. But just don’t call it a “huge” hike for God’s sake and keep the bigger picture in mind.

So health reform would give you income security and, years from now, leave you paying less for medical care than you otherwise would–all for a modest tax hike. That’s not just worthwhile. That’s a bargain.

Hope and change indeed.