Here come the taxes again

News reports are telling us now that Congress will be back to taxing the “wealthy” to pay for health care reform.  Just so we are clear on what we are paying for, it is to offset the cost to the federal government of subsidizing health care coverage for the uninsured and to fund research, comparative effectiveness studies, etc.  What we are not being asked to pay for (directly) is the additional financial burden this reform will impose on the States, Medicare beneficiaries (likely), Americans with health insurance and employers who currently provide coverage. 

So now we have ideas floating around to limit deductions for things like mortgage interest on the “wealthy.” Alternatively, perhaps a straight surtax for health care costs.  Who knows, but the time is getting short to find a way to pay for this grand plan. 

Interestingly, those potential new taxes on the wealthy are in addition to what will be necessary to deal with the overall deficit, and the problems with Medicare and Social Security on the horizon. 

Taxpayers are going to feel like an assaulted peanut
Taxpayers are going to feel like assaulted peanut

While it is generally assumed a wealthy family has an income of $250,000 or more, those with lower incomes should take notice.  Congress has a tendency to set limits and forget them as time goes by while continuing to spend so that what was temporary or only on the wealthy trickles down, think Estate Tax and Alternative Minimum Tax.   

Far be it from me to criticize the CBO in calculating the cost of something over time, but I am willing to bet that adding 47 million people to health insurance, adding new benefits without co-payments and eliminating all underwriting limitations and caps on coverage will unleash a volume of demand and spending that is beyond any of today’s expectations.  I don’t even need an Excel spreadsheet or an economic model. 

It is quite simple really, human nature, a medical system that encourages utilization and a mentality that bashes health insurers for the controls they impose between the patients and their doctor…and off we go.

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