Tax Increases to Health Insurance Cos Without Public Option

All of Congress’ reform proposals include provisions that would close the healthcare reform money gap by increasing taxes in some way, shape, or form. Some proposals are more progressive (House, Obama) than others (Senate, surprise) but under any scenario the yield will be significant: at least $30 billion in revenue per year, according to the Congressional Research Service.

Of course, these proposals have long been considered, and were crafted with the understanding that public coverage (aka, the unfortunately lingoed ‘public option’) was part of the endgame. There are plenty of liberals, and moneyed ones at that, who would be willing to forgo some of their deductions or otherwise take a significant tax hit in the name of health care reform. But without a public option those tax dollars go not into the public coffers to fund a program that will increase competition and lower costs in the long run, instead they’ll go right to insurance companies. This is something rich liberals, and likely key Dem congressmembers, won’t go for. If the public option is indeed just a sliver, then insurance companies, who’s stock prices soared Monday after the public option became non-essential, are the real winners in all of this. Not the reform anyone had in mind.


Sidenote: An interesting parallel argument from James Pethokoukis over at Reuters: the GOP playbook against health care legislation mirrors the Dems battle against Social Security reform efforts in 2005. Messages both times: Reform would leave the elderly at the mercy of the market, and, hey, there isn’t really a problem here.