Friday, January 8, 2010

Cranking up

Health reform talk cranking up in earnest.....politico's live pulse with a variety of things happening. Most notable I think is that the President will appear at the House policy conference next week, where he will have to make the case for the tax on high cost health insurance over the income tax increase favored in the House.

The income tax increase is such a bad idea for several reasons. First, it has no hope of slowing cost inflation. Second, it adds a new source of revenue to a system whose biggest problem is unsustainability (the excise tax if nothing else, moves money already in the health sector; I think it will do more in terms of slowing cost inflation). Third, wages are rising much slower than health care costs and income tax is such a large source of financing in House bill that it won't be able to keep pace. That is why House bill much worse on deficit per CBO in years 11-30 than Senate bill. Fourth, we eventually need an income tax increase just to have any hope of dealing sanely with the deficit....can't blow that on health reform.

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