Sunday, March 07, 2010

No Room for Fiscal Honesty


The Washington Post, once again ignoring the fact that money is fungible, returns to its advocacy for a middle class tax increase to pay for healthcare reform.
The [excise] tax [on "Cadillac" health plans] is key for two reasons. It would raise revenue needed to pay subsidies to the currently uninsured; Mr. Obama chose the politically easier option of extending the Medicare tax to unearned income of the wealthy, thus making it more difficult down the road to prevent Medicare from going bankrupt. And, by discouraging expensive plans, such a tax would be the single most effective tool to reduce the cost growth that threatens the nation's well-being.
The first argument remains flimsy. There's no magical reason why if you tax the unearned income of the wealthy to help finance healthcare reform you can't later impose an excise tax on health plans to cover future financial shortfalls. Further, the Post has been squealing for years that Medicare is underfunded. Why not expand FICA taxes?

One reason it's "politically easier" to expand FICA taxes as opposed to raising taxes on the middle class is that President Obama promised not to raise taxes on the middle class. The second reason? The Post hints at the issue: the real goal of advocates of the excise tax is not simply to raise money. The real goal is to "discourag[e] expensive plans" - that is, to take away the coverage workers enjoy right now and replace it with less. Advocates of the excise tax usually aren't as honest as the Post, and let's be blunt - the Post's editorial board is anything but candid on this point. One sentence buried in a cloud of smoke about how money must be raised from source A and not source B, even though it still spends the same way.

The Post points to an editorial claiming that the excise tax represents "a key bipartisan measure to contain health-care costs over time" - again, a single sentence buried in an editorial that does not honestly state the purpose of the tax: to reduce the quality and scope of health insurance plans available to workers. Fred Hiatt and his crew aren't running for political office, so why can't they choke out a bit of honesty? That they want workers to have less insurance as part of a social experiment.

It's absolutely true that the current trend in health care expenditures is unsustainable. But the unsustainable increases are not only in the cost of insurance. They're also in the cost incurred by workers, out-of-pocket. An 11% increase in one year is not sustainable. If Hiatt and his crew truly believe that this is a good thing - that it's good that people will lose the insurance coverage they presently enjoy and end up with policies that leave them unable to afford medical care - they should have the decency to admit that. None of them are so stupid, after all, that they don't know the inevitable outcome of their stated policy preference. To add a rhetorical question, why is it that they don't address why medical inflation and cost per patient is substantially lower in nations that have universal medical coverage, even when out-of-pocket costs for care are minimal?

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