Allahpundit wrote about this last night, but it’s worth emphasizing a couple of other big points about Barack Obama and this plan by Senator Max Baucus (D-MT) to overhaul the American health-care system. First, Obama seems to take ownership of this plan by coming to its defense not from Republican attacks but by criticism from Democrats over the issue of middle-class taxation. He starts by claiming that Americans are getting taxed by insurers with price increases as a means of excusing what are actually two big government bites in the Baucus bill:
STEPHANOPOULOS: Yet this week, Senator Rockefeller and several other Democrats say that this bill by Senator Baucus is a big middle class tax increase.
Do you agree and does that mean you can’t sign it?
OBAMA: Well, I don’t agree. I think that what they were referring to — and I haven’t looked at the quotes. But I think that they were concerned about whether or not this was actually affordable. If you’re saying to people, you’ve got to get health insurance but they can’t actually afford it and they have to pay a penalty if they don’t get it, then that’s a pretty big burden on middle class families. That’s a concern I share — making sure that this is affordable.
But the first thing we’ve got to understand is you’ve got what is effectively a tax increase taking place on American families right now. The Kaiser Family Foundation report just came out last week. Health care premiums went up 5.5 percent last year, at a time when the rest of the economy, inflation was actually negative. So that is a huge bite out of people’s pockets.
First, this is absurd. Rising prices are now a “tax” when it comes from a private-sector industry raising its prices in response to rising costs associated with technological advances and demand outstripping supply. However, when Obama and Congress intend to hike energy prices by $1761 per household per year through direct government intervention into the energy market, that’s not a tax? With the latter, the money goes directly to the government, making it much more of a tax than rising insurance prices, which go to cover the costs of the risk pools. Right now, the entire health-insurance industry makes an anemic 3.3% profit margin, which means the price increases of 5.5% last year doesn’t mean the money is going to the stockholders.
Then Obama tries dropping this explanation on Stephanopoulos:
STEPHANOPOULOS: You were against the individual mandate…
STEPHANOPOULOS: …during the campaign. Under this mandate, the government is forcing people to spend money, fining you if you don’t
How is that not a tax?
OBAMA: Well, hold on a second, George. Here — here’s what’s happening. You and I are both paying $900, on average — our families — in higher premiums because of uncompensated care. Now what I’ve said is that if you can’t afford health insurance, you certainly shouldn’t be punished for that. That’s just piling on.
If, on the other hand, we’re giving tax credits, we’ve set up an exchange, you are now part of a big pool, we’ve driven down the costs, we’ve done everything we can and you actually can afford health insurance, but you’ve just decided, you know what, I want to take my chances. And then you get hit by a bus and you and I have to pay for the emergency room care, that’s…
STEPHANOPOULOS: That may be, but it’s still a tax increase.
OBAMA: No. That’s not true, George. The — for us to say that you’ve got to take a responsibility to get health insurance is absolutely not a tax increase. What it’s saying is, is that we’re not going to have other people carrying your burdens for you anymore than the fact that right now everybody in America, just about, has to get auto insurance. Nobody considers that a tax increase.
People say to themselves, that is a fair way to make sure that if you hit my car, that I’m not covering all the costs.
All of that would be arguable if it weren’t for the fact that the Baucus bill calls the fine for not complying with the individual mandate an “excise tax”. Really. It’s right there in the bill, as Jazz Shaw points out, on page 29, Subtitle D, Shared Responsibility:
Excise Tax. The consequence for not maintaining insurance would be an excise tax. If a taxpayer’s MAGI is between 100-300 percent of FPL, the excise tax for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or an individual claimed as a dependent) is $750 per year. However, the minimum penalty for the taxpayer unit is $1,500. If a taxpayer’s MAGI is above 300 percent of FPL the penalty for failing to obtain coverage for an individual in a taxpayer unit (either as a taxpayer or as an individual claimed as a dependent) is $950 year. However, the maximum penalty amount a family above 300 percent of FPL would pay is $3,800.
And it’s not the only excise tax, either. I wrote last week about the excise tax on so-called “Cadillac plans”, a 35% tax on insurers (including self-insuring employers) who offer individual plans that cost more than $8,000 or family plans greater than $21,000. Now, Obama could argue that this particular tax will likely never get applied, because insurers and employers will simply stop offering plans in that price range, but that creates another big problem. Baucus plans on getting $259 billion over ten years from that tax, revenue that he uses to fund his overhaul. If that tax never generates any revenue, which it almost assuredly will not, then BaucusCare has a hole in its funding for about a third of its cost. It will be a disaster.
The bottom line is that the Baucus plan and its mandates comprise two new taxes, both of which will hit the middle class, and both — not coincidentally — to be managed by the IRS. If that doesn’t fit the dictionary definition of taxes, then what does?