[I thought I posted this when it came out, but it looks like not. It's is Herbert's best column in years. A real analytic scoop that gets at the heart of what's wrong with Obamacare: it paid zero attention to the problem of underinsurance, which was and is the main problem, as so wonderfully laid out in Sicko. And thus it's real main mechanism for "controlling costs" is making presently shitty care even shittier.]
http://www.nytimes.com/2009/12/29/opinion/29herbert.html
The New York Times
December 29, 2009
Op-Ed Columnist
A Less Than Honest Policy
By BOB HERBERT
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.
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.
Proponents say the tax will raise nearly $150 billion over 10 years,
but there's a catch. It's not expected to raise this money directly.
The dirty little secret behind this onerous tax is that no one expects
very many people to pay it. The idea is that rather than fork over 40
percent in taxes on the amount by which policies exceed the threshold,
employers (and individuals who purchase health insurance on their own)
will have little choice but to ratchet down the quality of their health
plans.
These lower-value plans would have higher out-of-pocket costs, thus
increasing the very things that are so maddening to so many
policyholders right now: higher and higher co-payments, soaring
deductibles and so forth. Some of the benefits of higher-end policies
can be expected in many cases to go by the boards: dental and vision
care, for example, and expensive mental health coverage.
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.
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.
"In the real world, companies cut costs and they pocket the money,"
said Larry Cohen, president of the Communications Workers of America
and a leader of the opposition to the tax. "Executives tell the
shareholders: `Hey, higher profits without any revenue growth. Great!'
"
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.
Those who believe this is a good idea should at least have the courage
to be straight about it with the American people.