While the main goal of health care reform has always been to provide insurance for the 47 million people that currently have none, it does not come without a price. It is generally accepted that something needs to be done in order to allocate some finances to pay for this health care reform, but what to do is still a debated issue. In an article entitled "Congress is Split on Effort to Tax Costly Health Plans" written by Herszenhorn and Pear of the New York Times, they discuss the possibility of a tax on the more expensive "Cadillac" health insurance plans. Supporters for this tax include many senators including Max Baucus, the Finance Committee Chairman, and Barack Obama. These supporters state that the tax will only be implemented on the insurance companies most expensive plans and will force them to provide more value for their money. Also, this tax could give an incentive for employers to bargain hunt for the best possible plan for the least amount of money. This will in turn lower the cost of health insurance for everyone. Critics of the tax, which include House Members and labour unions, believe that the new tax will simply make the insurance companies pass along this additional cost to the consumers. They believe that any tax on the Cadillac plans will cause an increase in middle class plans, which they refer to as "minivan plans", and the cost of health insurance for the majority will rise. Also, a tax on the employers health care coverage will cause a decrease in both wage and benefits to the employees, simply so the cost of the increase in health insurance will be beared by the employees, rather than the business. This debate is essential for the effectiveness of health care reform and if the Legislative Branch does not incorporate the most effective decision into the new health care bill, it could cause catastrophe for both Cadillacs, and minivans alike.
To read the full article go to
http://www.nytimes.com/2009/10/13/health/policy/13plans.html?scp=6&sq=finance%20health%20care&st=cse
It all comes down to what is the most economically beneficial move on the part of insurance companies. Like many other scenarios, it is possible that a tax on these expensive health insurance plans will just lead to an increase in cost for typically cheaper insurance plans.
ReplyDeleteIt all comes back to general taxation theories - if you tax big business and the rich, it may lower efficiency and drive up costs, which are passed down to the consumer. If big business is not taxed as heavily, then innovation and efficiency HOPEFULLY thrives and the benefits are, again, passed to the consumer.
It is difficult to see a clear answer in regards to health care plans.