Taxes And Taxes Which Aren't Taxes: Plenty Not To Like In Baucus Health Bill

It's actually a pretty good sign that the health reform plan released last week by Senate Finance Committee Chair Max Baucus immediately drew fire from both left and right, from both Republicans and Democrats. It's the sign of a compromise that all parties feel unsatisfied with the result.

What the release of the plan really triggers is the beginning of serious horse-trading, as the Finance Committee's bill is debated against a bill reported out earlier in the summer by the Senate Health, Education, Labor, and Pensions Committee, which is considerably more liberal than the Finance Committee's version. And once the Senate has agreed upon a bill, then the action will move to the House, which must reconcile four different health reform bills. Then House and senate members will form a Conference Committee to reconcile House and senate bills into the final piece of legislation.

The point here is that we're a long, long, way from knowing what the final version of health reform legislation will look like. So if you're part of the insurance industry, it's way premature to be celebrating that the Finance version doesn't contain a "public option." And if you're a manufacturer of pharmaceuticals or medical equipment, it's too soon to panic over the imposition of billions of dollars in fees meant to cover the cost of insuring the uninsured via a means which would not add to the federal deficit.

But for small businesspeople and other taxpayers, it ISN'T too soon to be concerned that whatever comes out of the legislative sausage-maker will make health insurance more expensive for you, unless cooler heads prevail along the way...which isn't likely.

Republicans have virtually invited themselves out of the debate, which means that they've abandoned their role as negotiators on behalf of limited government and lower taxes in favor of mere obstreperousness. And Baucus has already made clear his willingness to increase tax subsidies to assist middle-income Americans to buy coverage, and to raise the ceiling on his spurious proposal to tax "gold-plated" health plans.

There's plenty in Baucus' bill to give taxpayers pause. Here are a few:

...A 35% excise tax on insurers which offer generous benefit plans. Setting aside for a moment the notion of on what basis such a tax might be calculated (actual premium cost vs. some sort of "actuarial value" calculation), insurers are likely (indeed, they'll lobby furiously for the right) to pass the cost of the excise tax on to the consumers who purchase these generous benefits plans. And while they've been characterized as punishing the white-collar tycoons who run big banks and insurance companies, these benefits plans are really enjoyed mostly by union workers. The idea won't fly unless it's seriously watered down, but since it's one of the biggest keys to generating revenue to pay for other stuff, watering it down will require either cutting benefits for some or raising revenue some other way;

Taxes which aren't taxes: In similar fashion, the Baucus plan proposes imposition of $13 billion in fees on insurance companies, drugmakers, and equipment manufacturers to cover part of the cost of insuring the uninsured. These fees have also been cooked up to generate revenue in a way that doesn't look like a tax. But the costs would be passed straight back to consumers as well.

I don't know about you, but when my costs go up, it doesn't matter much whether the extra costs goes to the government or my insurance company, it feels like a tax to me.

Tomorrow, I'll try to take uo the upside and downside of the Baucus bill's insurance reforms.