Friday, October 23, 2009

Today's News and Observer column

focuses on the Senate plan to tax high cost health insurance plans to help pay for reform. One of the biggest showdown issues between the House and Senate Dems will be over taxing high cost insurance plans (Senate), or income tax increases on persons with high incomes (~$500,000+). The insurance tax is preferable, because it would help slow health care cost inflation as some would reduce the amount of insurance they hold. And this would at least be using money already in the health system for reform, whereas the income tax increase is bringing in a new source of revenue to a system whose main problem is that it costs too much.

Ezra Klein has good post outlining what is emerging from the House. The House bill with the Senate's high cost insurance tax, some sort of public option (probably the middle one in House lingo) with a state opt out, and a malpractice component sounds about right.

Taxing high cost health insurance (heck I would end the tax exclusion altogether, but you have to get what you can get) is far preferable to an income tax increase to pay for reform. While conservatives typically hate all taxes, this is actually a tax that should help the market work better by getting rid of distortions in the market for insurance. The tax exclusion of employer paid premiums shields consumers from the true cost of their insurnace, and businesses are shopping with someone elses money when they arrange health insurance for employees.

***More. This sounds like the President is more in favor of the trigger public option, meaning come about only if insurance cover doesn't reach a certain level (I think 94% of legal residents is what is being talked about) and/or some slow in health care cost increases. And main point there is Pelosi saying robust public option (national plan, pay Medicare + 5%) can't pass House. Senate seems to be moving toward public option up front, with state opt out.....but Sen. Snowe (aka second most powerful person in Washington) is said to want trigger.

Still more on public option options, and how the 60 votes to overcome a filibuster makes alot of difference in how things are structured.

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