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Over the next six months Republicans will have to do much more than just show that Obamacare won’t work.
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Let us flip back to an epic series of Senate Finance hearings in 1992. They represented a remarkable meeting of minds across a broad swath of health-care wonks and economists (not interest groups) that the original sin was the exclusion of employer-provided health insurance from taxable income — imposed carelessly by the IRS in 1943 so defense contractors could compete for workers without transgressing Roosevelt-era wage and price controls. [My emphasis.]
Outlining his plan for healthcare reform in Imprimus, Congressman Paul Ryan says the same thing:
One, we should equalize the tax treatment of people paying for health care by ending the current discrimination against those who don’t get health insurance from their jobs — in other words, everyone paying for health care should receive the same tax benefits.
The exclusion of health benefits from taxation has left nearly half the population in tax-free employer benefits plans while the other half roams the wilderness, trying to buy insurance that is subject to both taxation and expensive state mandates. Employer benefits plans are not “insurance” at all, they are prepaid medical care. Often they come with few or no deductibles or co-payments. Because half the population is getting this huge tax-free benefit, the insurance companies are asked to provide the same thing to the other half without the tax advantages. Naturally, they cannot do it. Their costs are driven even higher by expensive state mandates and the removal of a very healthy portion of the population — the corporate work force — from national insurance pools. Viewing this situation, the Democrats have discovered an “insurance crisis” and decided only a government takeover of the healthcare industry will do.
The fairest and most efficient reform would be to give everyone the same tax benefits. Allow individuals to put aside $3,000-5,000 tax-free to cover their medical expenses. A portion could be used to buy “catastrophic coverage,” which is really plain ordinary health insurance for major expenses. This is what medical savings accounts (MSAs) do. Indiana has provided coverage for 45,000 low-income individuals by giving them $1,100 tax-free for their medical expenses and covering them beyond that up to $300,000 through commercial insurance policies. Unfortunately, the program — which is highly successful — is outlawed by Obamacare. Congress does not like to see people left to handle their own affairs.
There’s one other caveat in here worth noting as well. Labor union members in private corporations — almost all covered by “health benefits” — are now a minority of union members. The majority is working for the government. But governments won’t face the same squeeze as Caterpillar, 3M and AT&T. After all, governments don’t pay taxes. While Caterpillar, Verizon, and other major employers will be forced to cut back somewhere, government employment will just keep getting bigger and better.
In fact, many observers are predicting Obamacare may be the tipping point where — as in Europe and most of the world — government becomes the “employer of first choice.” The salaries and benefits of government employment already exceed those of the private sector. With the pressure Obamacare is placing on private corporate benefits (but not government benefits), these advantages will only get better. Moreover, Obamacare is creating government jobs. The IRS is already gearing up to hire 17,000 new employees to enforce the new taxes and mandates. As Washington prospers, so the rest of the country continues to stagnate.
The only alternative is that Republicans and Tea Party rebels seize control of the government next November and institute a healthcare reform that distributes health benefits in a fair and just manner while saving the private enterprise system. Otherwise, we may already be past the tipping point.
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
Was the President done in by the economy, or by the politics of the economy?