Of course, you'd be contributing to the ever-rising cost of Health Care.
Now, while one of my least favorite Progressives, Rep. Raul Grijalva (D-AZ) is saying that President Obama is violating a campaign pledge by supporting the Excise Tax in the Senate Health Bill in a (hopefully) futile attempt to kill the bill, Sen. John Kerry (D-MA) posts (at Huffington Post of all places) why Rep. Grijalva is full of @#$%.
First, striking this provision from the final bill will make it much more difficult to pass final health reform legislation in the Senate and that's a huge mistake when we're closer than ever to completing a journey that began with Harry Truman. If passing health care reform was easy, it would've happened decades ago. It's not. It requires tough choices. And it's worth it.
Second, this is an idea that will help health reform succeed in the long run. It will create competition and place sunshine on the process of pricing health insurance premiums.
Third, it will help control future health care costs without -- I repeat without -- directly taxing employees. Unlike a cap on the existing tax exclusion of health insurance benefits, which I oppose, this provision will not require employees to include a portion of their employer provided benefits as part of their taxable wages.
Fourth, the excise tax included in the Senate-passed health care bill will affect only a small portion of the very highest cost health plans -- a total of 3% of premiums in 2013. The vast majority of health plans fall below the thresholds set in the Senate plan and would be completely unaffected by the provision. In addition, the Senate plan provides special protections to plans held by workers in high-risk professions -- like police and firefighters -- as well as by those over 55.
Fifth, for the small sub-set of plans that are affected, the likely impact will be to increase workers' wages. MIT economist Jon Gruber recently found that the excise tax included in the Senate bill would lead employers to raise wages by $223 billion between 2010 and 2019. In 2019, wages for those affected by the provision will be higher by about $660 per household. I repeat -- raise wages. After spending years and years hearing from workers tired of seeing their unions forced to spend all of their energy at the bargaining table just to hold on to health care instead of negotiating for better wages, we now have a way to help increase wages and improve health care simultaneously.
Look, make no mistake, I didn't cook this idea up because I think it's the best or the only way to improve health care -- but it's a good idea that also helps get health care passed. And if there's one thing Ted Kennedy taught us all, it's that in legislating on core issues, you seize those moments and marry the practical and the policy.
Does the Senate-passed bill cast too broad a net by setting the excise tax threshold too low? Yes. This could affect some of the hardest working American families. So let's fix it, not nix it. I believe the final health care reform bill will include appropriate adjustments to preserve its cost containing benefits while increasing the fairness of this provision. But let's get back to the business of doing that instead of fighting to kill a provision that improves health care -- and improves the chances of passing health care this month.
The article that convinced me of the importance of the Excise Tax is here, written by Erza Klein.
Over the course of this debate, I've repeatedly talked with union leaders and analysts who wanted to convince me of their side. One of the arguments they frequently used was that they had negotiated their contracts knowing that a dollar in health benefits was worth more than a dollar in wages, because it's exempt from taxation. That, of course, is exactly the problem. The current system sets up an incentive for workers to prefer that relatively more of their total compensation comes in the form of health benefits than wages. At a time when we need pressures to control costs, that's an incentive to increase them. As the CWA example shows, a lot of people have benefited from this system up until now, but at some point, we need to call a stop to it.
