Congress Should Say No Now to the Health Care Penalty Tax

01/15/2010

Emerging from his closed door, backroom meetings with top union bosses, Barack Obama has come up with his most unique proposal yet for providing what he terms “quality health care”: impose sky-high tax penalties on those who need and use health care most. And then force non-union workers to foot the bill for his new Health Care Tax Penalty.

Specifically, the new Obama proposal calls for adopting a Senate plan that would force insurance companies to pay a 40 percent excise tax on all policies above the limits of $8,500 for an individual and $23,000 for a family plan – knowing all the while that the massive increase would be passed on to already strapped health insurance customers.

While its proponents call the proposal a “Cadillac Tax,” the Congressional Budget Office has revealed that the massive cost increase will hit one in five Americans within the next three
years. Within six years, it would reach a fifth of all households earning as little as $50,000 annually. And it would hit especially hard the elderly and chronically ill, whose insurance premiums often already top the Administration’s proposed taxable limits.

To make matters worse, the Obama White House and the bill’s supporters in the Senate and House make it clear that one of the primary reasons for the new Health Care Tax Penalty is to force Americans to seek less health care. As New York Times columnist Bob Herbert writes, “Proponents see this as a terrific way to hold down health care costs. If policyholders have to pay more out of their own pockets, they will be more careful — that is to say, more reluctant — to access health services.”

He then adds ominously, “On the other hand, people with very serious illnesses will be saddled with much higher out-of-pocket costs. And a reluctance to seek treatment for something that might seem relatively minor at first could well have terrible (and terribly expensive) consequences in the long run.”

Little wonder that AFL-CIO union health care lobbying chief Gerald Shea has observed, “People are going to see this as a huge middle-class tax hit.” And that is why his Big Labor bosses have reached a backroom deal with Barack Obama to have the nation’s 8 percent of union workers exempted from the staggering fees the remaining 92 percent of workers will be forced to pay.

Unless the members of the Senate and House – especially those from Right to Work states – block the Obama-union deal, the Health Care Tax Penalty will become law. And Barack Obama will have paid back the union bosses for the tens of millions of dollars (including $67 million from SEIU boss Andy Stern alone) in union campaign contributions he received in 2008.

Middle-class Americans should not be penalized with higher taxes and rising premiums for seeking quality health care. Independent workers should not be punished for choosing to remain free of union restrictions in merit shops. And Barack Obama should not pay off his debts to union bosses by selling out the American people in tawdry, backroom deals.

The Health Care Tax Penalty (“Cadillac Tax”) should be removed from the Obama health care bill before the measure is given any further consideration. And no one, union or non-union alike, should be forced by Washington to pay higher insurance premiums for lower quality care.