As the Senate Finance Committee takes its health care overhaul negotiations into the August recess, President Obama and key Senate negotiators are still struggling to find a way to afford the flagging health care overhaul proposal’s trillion dollar price tag. Their latest proposal, a new tax on so-called “gold-plated, Cadillac” health insurance policies, is receiving broad support from legislators and administration officials who see it as yet another opportunity to pay for an expansion of government by soaking the “rich” – a perception that is, thanks in large part to existing government policies, incredibly wrong.
The term “Cadillac” has been used for years to refer to health insurance policies that cover an inordinate number of unnecessary treatments and procedures. Sen. Charles Grassley (R-IA), ranking minority member of the Senate Finance Committee and the Republican most closely working with the Democratic majority to pass President Obama’s health overhaul, said negotiators are “taking an intense look at” the proposal as a way of raising revenues to offset the $1 trillion the Finance overhaul bill is expected to cost.
Senator Olympia Snowe (R-ME), also a Finance Committee member, called the idea a “practical option” for “creating disincentives for the most expensive [health insurance] policies,” and Sen. John Kerry (D-MA) said his proposal to tie the maximum permitted coverage to the average level of benefits provided federal employees, and to tax the health insurance of those whose policies cost or cover more, is “gaining support” in the Senate.
This is being shopped to the public as just another tax on the super-wealthy, with Obama administration officials pointing to the “$40,000-a-year health insurance policies” carried by a handful of top Wall Street executives as examples of such unnecessarily luxurious coverage. However, a tax on “Cadillac” health insurance policies would end up disproportionately affecting middle- and lower-income Americans across the board, as well as the entire insured populations of several states.
The reason for this is the profusion of mandatory minimum coverages state governments require to be included in health insurance policies sold within their states’ borders. This results in residents being forced into uniformly high-priced, coverage-heavy “Cadillac” insurance policies as a result of state law, not their own choice.
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