by the Night Writer

In wartime it’s common to try to dehumanize the enemy, calling them derogatory names and ascribing vile and fiendish character traits to them to make it easier to hate and, I don’t know, drop bombs on them. In class warfare a similar dynamic occurs as it is simply assumed that anyone with any wealth or property could only have gotten it through pure dumb luck (such as inheritance) or by corruption and oppression, thereby justifying the redistribution of their possessions in the interests of being “fair.”

Of course, the definition of who the fortunate ones are can change according to the need at hand. The latest brainstorm of the economically illiterate, morally bankrupt yet somehow electable cotton-headed ninnymuggins in control of our government is that the lucky or evil greedos that get their health insurance through their employers (in other words, “people with jobs”) are not paying their fair share of taxes for this benefit. According to a recent article in Business Insurance magazine:

Sen. Baucus looking at taxing health benefits
March 03, 2009

WASHINGTON (Reuters)—A senior Senate Democrat said Tuesday he would consider taxing U.S. workers on their employer-sponsored health insurance to help pay for extending coverage to millions of uninsured Americans.

“I think that tax provision should be on the table,” said Senate Finance Committee Chairman Max Baucus, who will play a major role in writing the legislation to revamp the U.S. healthcare system as promised by President Barack Obama.

“It’s too aggressive. It skews the system,” he said of the tax benefit.

Most U.S. workers with health insurance get it through their employers — 160 million of them — although recent surveys have shown that number is declining as businesses try to cope with the rapidly rising cost of insurance.

As a matter of fact, 19% of employers say they plan to drop health benefits, while 38% say they are uncertain they’ll be able to provide health benefits 10 years from now. Meanwhile, in the midst of a recession, the government is talking about wanting to essentially raise taxes on people who still have jobs, regardless of what those jobs pay. By the way, let’s have a show of hands from everyone who thinks that the premiums you pay for your employer-sponsored health insurance are too low. Apparently being employed makes you one of the “rich” to be targeted by Congress and President Obama’s cabinet of tax dodgers and community organizers — the people who have also promised a tax cut to “95%” of the country. Do you get the feeling they might not be very good with numbers?

Yet in another article about “Mad Max” Baucus and his cronies, the Washington Post reports:

In recent weeks, however, Sen. Max Baucus (D-Mont.), chairman of the tax-writing Finance Committee, has repeatedly advocated changing tax laws to include employer benefits, arguing that it makes sense to fund the health-care changes by sucking cash out of the existing system. Meanwhile, 13 other senators — from both sides of the aisle — have signed on to a plan for universal coverage that includes a tax on employer-provided benefits.

“I think it’s extremely important from a credibility standpoint to show the American people that you’re making savings in the enormous sums now being spent on health care before you go out and ask them for billions of dollars more,” said Sen. Ron Wyden (D-Ore.), one of the sponsors of that proposal. “And I don’t think I’m the only senator who feels that way.”

What? How do you translate taking money out of the pockets of working Americans by making them pay more for their health insurance as “making savings”? Credibility is, indeed, a problem. Perhaps we’ll find out how big a problem that is when the Obama administration weighs in, as the Post further reports:

So far, administration officials have been careful not to endorse the idea, which Obama blasted as a major tax increase last year after Sen. John McCain (R-Ariz.) made it the centerpiece of his presidential campaign’s health plan. But the president hasn’t slammed the door on it, either.

This week, White House budget director Peter Orszag said taxing employer benefits was among several ideas that “most firmly should remain on the table.” White House economic adviser Jason Furman called for an end to the so-called “employer exclusion” before he joined the administration. Meanwhile, some congressional Democrats say the White House has signaled that Obama would accept a tax on employer benefits as long as he didn’t have to propose it himself.

Riiight. Congress passes the tax increase and President Obama merely comes in at the end and says it’s “an imperfect bill” but something he has to sign anyway. It’s almost enough to make you wonder how much of a grasp on reality our leaders have, and if they’ve ever had to enroll in a group health plan in recent years when employers are passing more and more of the costs on to employees. And then there’s this:

Many economists and tax analysts have long argued for changing current tax law on health coverage, which disproportionately benefits wealthier workers. The law encourages people to enroll in the most comprehensive health plans on offer, the so-called Cadillac plans that provide vast coverage, mask the true cost of health care and contribute to skyrocketing costs.

I don’t know about your job, but my benefit enrollment forms certainly don’t encourage me to select the most comprehensive, or “Cadillac” plans offering “vast” coverage. As a matter of fact, I’ve chosen high deductible plans with an Health Savings Account (HSA) option the past several years to save money. Further, the so-called Cadillac plans aren’t driven by consumer demand, but by state and federal government mandates that require additional coverage (and wait until you see the effects of the Mental Health Parity bill that was recently signed). If consumers were allowed to pick and choose the coverages they actually need the costs would go down. Somehow, however, once the money is on the table there’s no way to get it back in your pocket.

Many lobbyists and others involved in the health-care debate say they see few other places to go for the kind of money that will be needed to meet Obama’s demand for ambitious change. In their view, the question is not whether employer benefits will be taxed but how much of the benefit will be spared.

My personal opinion is that taxing employee benefits is not really intended to raise money for health care. It’s meant to make the current system even more dysfunctional in the hopes that employers will be even more anxious to get out of the system and the public will desperately embrace change — specifically, universal health care.

I’m actually in favor of getting employers out of the business of proving health insurance…but I want to do it by dumping the whole third-party-payer model that is the main reason health care continues to skyrocket, and universal (aka “single-payer”) health care does nothing to relieve that problem while simultaneously reducing the standard of care as I and others have pointed out before. Let’s not forget that the reason we got into this health care predicament in the first place was because of government interference via wage and price controls in World War II that led employers to offer health insurance benefits as a way of attracting a limited pool of workers. That opened the door to the wasteful and expensive third-party-payer system we currently have, the inefficiencies of which can only be outdone by a government-run system.

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