Taxing Health Benfits and Health Care Debate Move Foward

The health care debate has been heating up and the broad ideas are seen, but the details of achieving those policies have been deliberately left out by the President and his allies to avoid any bad press. The Broad Ideas:

1. Mandate Coverage-What is missing is what type of penalty will be given to those who refuse to buy coverage but can afford it, the so called "invincibles". In addition there has been talk of employers mandated to provide coverage or pay a penalty to the Fed, but that appears to be dead for now.
   
2. Subsidized purchases- At what income level will a household receive federal aid in buying insurance. The only number I have seen so far is 88,000 dollars or less will qualify a household.
3. A public option: Easily the most contentious and expensive, cherished by the left opposed by the right, centrist democrats, and the health care industry, it has one big supporter by the name of President Obama. Very few details have been included, most importantly what will the payment schedule be to the health care industry.(Medicare Rates, 10% more , some number in between?)
   
4. Electronic Records and Preventive Care- Not controversial, although there are obvious privacy issues involved. It will cost money to accomplish these things and they may have merit, but they will certainly not provide the savings Obama is claiming
5. Health Care Exchanges- Basically we would be able to shop around among competing plans and the public plan.
6. Health Care Co-operatives- Being pushed by moderate Democrats and the GOP as the cheapest and easy means to provide more health coverage, still here the fight continues.
   
7. Revenues- Ideas include taxing health care benefits,a 2% increase for the upper bracket on the income tax, a soda tax. For political reasons Democrats have refused to commit, although clearly the taxing of employee benefits has been a favorite of some key senators.
8. As part of the deal with insurance companies who now have a flood of new customers courtesy of the mandate, the companies in turn will accept people without pre-condition. The logic being that the increases expenses of covering ill people will be matched by the money of these new customers who are healthy.
   

Baucus who has been front and center on the health care debate has aggressively pushed the idea:

June 25 (Bloomberg) -- Zappos.com’s warehouse and customer-service workers are paid $10 to $11 an hour and get health benefits worth about $7,500 a year.Lawmakers led by Senator Max Baucus are talking about slapping a $495 tax on some of those covered by the medical plan to help pay for extending coverage to some of the 46 million Americans who lack it.

Under the funding proposal being considered by the Senate Finance Committee, the tax for Lloyd Blankfein, chief executive officer of Goldman Sachs Group Inc., would be about $9,600, based on the $40,543 value of his health insurance last year.

Baucus, 67, the chairman of the Senate Finance Committee, says the best way to pay for a $1 trillion overhaul of American medical care would be to tax health benefits provided by employers that are more generous than those offered to federal workers -- including lawmakers like him. The government benefits are worth $4,200 for individuals and $13,000 for families.

The problem is that Obama excoriated McCain over the issue although in usual Obama fashion he has left the door open to it.(My Guess is that he wants the Democrats to offer it as a Fait Accompli so that they suffer politically and he avoids a "read my lips" moment) . But its not just that the President has flip flopped on an issue, he has done that on plenty of issues. The Unions who have fought hard for health benefits are now about to see taxes lumped on them in the name of reform, leading to such dyed in the liberals like Rangel to declare the idea dead. Last night the Labor quickly moved on the issue:

Gerald W. McEntee, president of the 1.6 million-member American Federation of State, County and Municipal Employees, said in an interview that union leaders believe Obama is ''a person of his word.'' He was referring to Obama's opposition to taxing those benefits during last year's campaign. "'They're not going to tolerate that,'' McEntee said of workers' views of that proposal. (I am sure they will scrap off the Hope and Change sticker and get the Palin 2012 gear out!)

Over shadowing all of this is the massive expense the programs contain, so bad to the point that Democrats have decided to shoot the messenger at the CBO as a way to provide cover for the President. With the public increasingly skeptical, its clear the Democrats may have the votes, but will they want to use them. We have seen how the Massachusetts model has been a less then exemplary project, do we really need to do this to the whole country?