There’s a right way and a wrong way to pay for health care

Health Care for America Now has a new set of TV and print ads out today. They focus on the issue I discussed yesterday – the Finance Committee’s ill-conceived “excise tax” or “Cadillac” tax:

The idea for the “Cadillac” tax or “excise” tax is based on the false notion, common in health policy circles, that if only people in America felt the cost of their health insurance in their wallets, they would use less health care and thus lower costs for everyone. Proposals eliminating or adjusting the tax exemption people get for health care at work (the cost of your health plan through work is not taxed as income, as other benefits often are) aim to correct this “problem” and tax people with “gold-plated” or “Cadillac” health care plans – supposedly richer than the average family – who are spending beyond what’s necessary.

Policy wonks also love this idea because it raises a ton of money, helping pay for health reform. Policy wonks miss what America gets.

The cost of your health care plan is not directly related to your income. Plenty of people who make solidly middle-class wages have “Cadillac” health care plans. Why? Their union may have negotiated a better plan for them, or they may have taken the job specifically for the benefits. Either way, as the CWA report makes clear, a “Cadillac” tax does not just affect the rich. Under the Senate Finance proposal, 40% of health care plans in this country would be eventually taxed.

All this begs the question: Why tax the very people health care reform is supposed to help to pay for it?

The middle class doesn’t need another tax hike. Health reform should indeed be paid for, but it should be paid for by those in society who can most afford it. And indeed, that idea is popular. Most Americans support paying for health care reform by increasing the surtax [pdf] on those households making more than $350,000 per year.

Here’s the TV ad:

The print ad is here.

There’s a right way and a wrong way to pay for health care. Raising taxes on the middle class is definitely the wrong way.

(also posted at the NOW! blog)

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