Thursday, June 25, 2009

Tax to Fund U.S. Healthcare May Kill U.S. Healthcare

The purpose of not taxing employer-sponsored health coverage is to encourage employers to give their employees health insurance. This is a good thing. It makes healthcare more accessible to Americans. This system is the reason so many Americans have health insurance.

The Baucus plan circulating in the Senate disincentivizes employer-sponsorship by taxing it. In response, employers will not spend as much on health insurance. Costs will inevitably shift onto the individual. In addition, the nonsense of "gold-plated better than members of Congress have" plans being excessive - if nobody has any incentive to offer a better plan, insurance companies cease trying to offer them. Competition is reduced. Cost go up acros the board.

Do you know anybody who has complained their health care coverage is too generous?

Individual coverage carries higher rates than company plans and is taxable, all of which increases the burden of health insurance on the individual (and we are all "the individual").

Ultimately most people can't afford this, but fear not: the government will subsidize insurance for "those who cannot afford it".

So in one of the most roundabout ways imaginable, the plan shifts costs from voluntary, tax incentivized, employer-sponsored coverage to direct government sponsorship of more expensive, less effective plans for fewer people.
(see Bloomberg article)

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