Sunday, July 26, 2009

Bad at math

Mike Allen of Politico reported Saturday night, at 11:40 p.m., that "White House officials are embracing a plan to tax 'gold-plated, Cadillac' insurance policies."

According to "a top administration official," putting a tax on top of the price of the most expensive health insurance plans "is one of the ways to ensure that there's a lid on health-care costs."

The official told Politico, "The president believes this is an intriguing idea."

This is just more evidence that no one in Washington is getting enough sleep.

Let's think this through, together.

If we have a health care crisis, it's not caused by the people who buy top-quality policies that pay doctors and hospitals for the care they receive.

It's caused by the people who don't pay doctors and hospitals for the care they receive.

Taxing high-quality insurance out of existence means doctors and hospitals will lose the revenue from full-price customers that has been helping them stay in business, as low-quality insurance and government insurance grind down their reimbursements to a level that sometimes falls below the cost of providing the care.

The people who pay their insurance and medical bills are not the cause of the problem, they're the solution to the problem.

Doesn't it make more sense to increase tax breaks for buying insurance?

This is something that Senator Ted Kennedy has blocked more than once, denouncing it as a ploy to benefit the "healthy and wealthy."

But the solution to the high cost of health insurance is to bring more people into the fold who pay their insurance bills and don't need much in the way of health care -- the healthy and 'wealthy.' If companies want to attract employees by offering superior benefits, why should the government make it prohibitively expensive for the companies or the employees? What is the point of that?

If the point is to raise money in order to subsidize health care for people who can't pay for it, remember that these policies already subsidize care for people who can't pay for it, by compensating doctors and hospitals at high rates that result from cost-shifting. High taxes on the policies will mean fewer companies will offer them, which will mean less revenue for doctors and hospitals and less tax revenue.

Even if you believe that wealth in America is something that should be punished, naked self-interest should force everyone to recognize that this is a colossally wrong-headed idea. It can make sense only to people who believe it is more important to bring the rich down than to lift the poor up.

Copyright 2009