The Strange Politics Of The Excise Tax Part 2

Nothing demonstrates the cluelessness of the Village Dems more than their obsessiive love of the excise tax. Instead of recognizing that it is not worth the destruction of health care reform, they continue to tout it. Ezra Klein cites Jon Chait writing:

Democrats could have stiffed the unions if a few Republicans stepped forward to support the bill in exchange for tough cost control measures that Obama clearly wanted. But none would do that. It's impossible to pass health care reform without the support of labor unions or any Republican member of Congress.

Yep, that would make political sense for Democrats - "stiff the unions." Honestly, what is it with these Village Dems and their strange obsessive love for the excise tax? Are they really willing to let health care reform go down in flames over it? Apparently.

Speaking for me only

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    It is completely about disdain (5.00 / 1) (#7)
    by BDB on Wed Feb 24, 2010 at 12:43:03 PM EST
    not only for unions, but for working class, middle class and poor citizens.  The elites have driven the country off the cliff and they believe to keep the good times rolling, the rest of us must be forced to pay for it.  So we get the bank bailout and now the health insurance company bailout and next will be a cut in "entitlements" and an extension of the tax cuts for the estate tax.  They've taken all of the money and now they're coming after more.  Even if it kills us.

    Scrooge! (none / 0) (#9)
    by jawbone on Wed Feb 24, 2010 at 12:49:27 PM EST
    Scrooge: If they'd rather die, then they had better do it and decrease the surplus population.

    poor citizens??? (none / 0) (#15)
    by diogenes on Wed Feb 24, 2010 at 07:04:14 PM EST
    How many "poor citizens" who make minimum wage have health plans worth twenty-three thousand dollars a year.
    Give the scope of our deficits it would be more fair to tax all health benefits and plow the extra money into increasing subsidies given to allow poor and middle-class people to buy their own policies.

    that so-called "Cadillac tax" (5.00 / 1) (#13)
    by desmoinesdem on Wed Feb 24, 2010 at 01:17:58 PM EST
    is going to hit a whole lot of people by 2018. Wellmark BC/BS, which controls 70 percent of the Iowa market, is hitting 80,000 individual policy-holders with rate hikes of 18 to 22 percent this year (my family are getting hit with the 22 percent increase). That's after a nearly 10 percent rate hike last year.

    If my family's premiums go up by just 5 percent every year between now and 2018, we won't be far below that excise tax threshold in 2018. If the premiums go up by 7 percent to 10 percent a year, which has been the norm for the past few years, we will certainly be subject to the excise tax by 2018. We do not have a "Cadillac" policy.

    Does Ezra read his own paper? (none / 0) (#1)
    by jbindc on Wed Feb 24, 2010 at 11:53:24 AM EST
    I refer him to this article, which I posted yesterday.

    But according to a new analysis, the conventional wisdom about the tax is wrong: The tax would actually fall equally on nonunion plans. At least 80 percent of the workers whose plans would be subject to the tax in 2019 would be in nonunion jobs, according to the analysis by Ken Jacobs of the University of California at Berkeley Labor Center and William H. Dow, a professor of health economics at Berkeley who was a member of President George W. Bush's Council of Economic Advisers.

    This impact is roughly in line with the overall breakdown of nonunion vs. union workers with employer-provided plans. And it would be true under both the version of the tax passed by the Senate and a more labor-friendly one the White House agreed to last month.


    The bill passed by the Senate would raise $150 billion over 10 years by taxing plans worth more than $23,000 for families and $8,500 for individuals. Any value that exceeds those thresholds would be taxed at 40 percent. Proponents say the tax would slow the growth in health-care costs, as employers and employees shift to less generous plans to avoid it. The savings from switching to lower-cost plans, proponents say, would go into higher wages.

    Opponents of the tax, including many House Democrats, doubt that it would slow the growth in costs, arguing that consumers have a limited role in driving health-care spending. They also point to research suggesting that the tax would hit not only lavish plans but also those that are costly because they are in expensive regions or in businesses that have many older workers. And they warn about the political risk of taxing middle-class voters' health benefits, noting that Sen. Scott Brown (R-Mass.) made hay of the tax in his campaign.

    The House bill instead relies on a surtax on the wealthy. But Obama has made plain his preference for the tax on high-cost plans. To mitigate its impact, the White House and union leaders last month negotiated revisions, including slightly raising the tax threshold, limiting the tax for businesses with many female or older workers, and exempting government workers and union plans until 2018.

    Congressional Republicans have attacked the deal as a carve-out for labor, but according to the analysis, the revisions would also benefit many nonunion workers. The authors, whose work was funded by the California Endowment and the liberal Institute for America's Future, estimate that the revisions would reduce the tax's revenue by $41 billion, of which 71 percent would accrue to nonunion workers.

    T/U for reposting this -- knew I'd read it, cldn't (5.00 / 1) (#5)
    by jawbone on Wed Feb 24, 2010 at 12:34:43 PM EST
    recall where. Blessed are the reposters of pertinent information!

    And since part of the game Corporate Dems, Repubs, and the MCM* is playing is that it's only the greedy unions which have such coverage (which is so obviously false), it's OK to go after them. Just aren't that many of them. And, did we say they're greedy?

    What Corporate pol wants to be considered on the side of unionized labor? Might offend the Corporate Overlords, who now have nearly all the marbles for shooting at any pol who gets out of line, thanks to the Supreme Five.

    *MCM--Mainstream Corporate Media


    It's not about their love for the excise tax (none / 0) (#2)
    by esmense on Wed Feb 24, 2010 at 11:58:00 AM EST
    as much as it's about their disdain for the unions. And their belief that the Democrats should not, for policy and political reasons, cater or "pander" to them.

    NPR "All Things Considered" segment (none / 0) (#3)
    by oculus on Wed Feb 24, 2010 at 12:02:22 PM EST
    yesterday included discussion of excise tax.  One interesting argument: health care provider would become a better health care provider if the patient is required to make co-pay.  Why?  Didn't make sense.

    Oh, and the speaker also opined the (none / 0) (#4)
    by oculus on Wed Feb 24, 2010 at 12:20:03 PM EST
    lemployer, after no longer offering "Cadillac" plan, will give the savings to the employee.

    NPR guests said less coverage meant docs/patients (none / 0) (#8)
    by jawbone on Wed Feb 24, 2010 at 12:46:47 PM EST
    would have to consider carefully whether to use procedures, tests, treatments.  

    This is called self-denial of care.

    The transcript won't be up for the segment for a few more hours (usually 24 hrs after broadcast, right?), but it will be found here. Audio available now.

    I have expensive insurance as an individual, but it has high copays and deductibles, 50% of prescription costs. And I have pre-existing cancer, so I have no choice.

    When I was prescribed PT for a knee problem, 3 times a week for at least 6 weeks, I simply could not afford the number of copays and still meet the monthly premium cost.

    So, I tried to do PT type things on my own. Problem not as bad, but still there. But I'm only 349 days away from Medicare. Hooray!

    Of course, ObamaRahma and the Corporate Dems plus Repubs seems have their sights dead center on Medicare benefits....


    Not familiar with this polling company (none / 0) (#6)
    by MO Blue on Wed Feb 24, 2010 at 12:41:32 PM EST
    but found the data interesting.

    The polling finds that the House surcharge is significantly more popular in swing districts than the Cadillac tax. The Anzalone pollsters also found that "voters are less likely to re-elect their member of Congress or President Obama by margins of 41 points (63% less likely to 22% more likely) and 38 points (61% to 23%), respectively, if they support an excise tax."

    The polling also determines that independent voters flee over the issue: "Across each region, opposition to taxing high-cost insurance plans is even higher among Independents, with 74% of these voters overall opposed to such a tax." link

    If accurate, including any excise tax could be political suicide.

    Most people understand that high cost does not (5.00 / 1) (#10)
    by esmense on Wed Feb 24, 2010 at 12:58:36 PM EST
    necessarily mean high benefit (that factors like age, gender, region, etc. affect premium cost), that it's not just union plans that will be affected, and that premium costs will inevitably continue to rise -- meaning more people will, over time, be affected by the tax.

    Plus, most people want reform to reverse the decades long trend toward less coverage at higher cost, not escalate it.  

    High cost does not mean comprehensive coverage. But even if it did, plans that offer genuinely  comprehensive coverage are increasingly the exception rather than the rule.

    The fact is, we've been making people more "responsible" for a greater and greater percentage of their health care costs for decades now. And it hasn't done a damn thing yet to bring down either health care or health insurance costs.


    Yeah, what about that? (none / 0) (#11)
    by jbindc on Wed Feb 24, 2010 at 01:04:07 PM EST
    This may seem like an ignorant question, and maybe this is my "duh" moment, but if they pass this bill with the excise tax, is it goig to be based on the value of the plan (whatever that means) or will it be based on what an individual pays?  So, for example, if I had an individual plan that I purchased from Blue Cross, at a cost of $750 / month (for argument's sake) = $9000 for the year.  That puts me over the $8500 threshhold for the excise tax purposes - will I then be charged a 40% tax on the $500 overage?

    Value of the plan (none / 0) (#14)
    by MO Blue on Wed Feb 24, 2010 at 03:10:23 PM EST
    Easy to see that it is political suicide (none / 0) (#12)
    by ruffian on Wed Feb 24, 2010 at 01:09:42 PM EST
    if you look at employer provided health insurance as a form of very popular tax deduction. Would pols expect no political blowback from taking away the mortgage interest tax deduction? No - they know they would get hammered for that. But in this case they think it is a small enough group affected, represented in people's minds by the demonized unions, and they can get away from it. Very cynical.