Thursday, November 19, 2009

Health Care

I guess the Senate is going to fast track their version of a Health Care bill and the race is on.

I have many questions but one big one stands out: how exactly does the Government expect to pay for the almost one billion (or more) that the new plan will cost?

Quickly here’s how, they say:

a surtax or excise tax on really good health care plans. In essence if you are fortunate to have really good insurance through your employer, they (or you) might have to pay a tax for that privilege. Did anybody figure out how many of these so-called Cadillac plans might go away if their costs rose by the 40% excise tax the Senate proposes? This seems like counting on revenue from a source that isn’t guaranteed and the (dis)incentive is for people to reduce their coverage (and attached costs.)

The Senate lists annual fees on insurance companies, equipment makers and drug companies. Now maybe all of them are really bad greedy people but is this going to work? If I make MRI machines and now the government is going to tax or penalize me because they cost too much I can do at least one of three things: pay the tax, start making something different that is not taxed as much or just get out of the business altogether. The last two take away some of the projected revenue.

The NY Times says another revenue source is to “squeeze” (their word) some of the Medicare growth. With our elder population growing faster and needing more health care than any other segment; how’s that going to work without reducing the overall amount of care people expect?

A 5% tax on elective cosmetic procedures, the so-called “Bo-Tax”. I have no problem here but once again if the costs go up too much, people will just stop having face-lifts and tummy-tucks.

Bottom-line if anything like this passes, and then the expected revenue doesn’t materialize, the only other options are to raise more taxes or reduce services provided to people.

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