Democratic Healthcare Mess

Candidate Barack Obama hammered candidate John McCain for McCain’s plan to tax healthcare benefits as a way to pay for healthcare reform. In commercial after commercial, Obama beat up poor McCain as a tax-raiser, based largely on that one concept.

Candidate Obama has now become President Obama, and that crazy McCain plan is now looking a lot less crazy to Senate Democrats, who are scratching their heads trying to figure out how they are going to pay for all of the big promises made last year.

The latest thinking from the Democrats seems to be that in order to keep one big campaign promise, the president will have to break another big promise.

The Washington Post reports today:

A Senate plan to overhaul the nation’s health system is likely to include a new tax on some employer-provided health benefits that exceed the value of the basic plan offered to federal employees, currently about $13,000 a year for a family of four, the chairman of the Senate Finance Committee said yesterday.
Sen. Max Baucus (D-Mont.) said he is drafting the health reform measure, which he expects to unveil next week. He told reporters that taxing employer-provided benefits is “perhaps the best way to raise money for an overhaul of the health-care system” and offered details about the form that tax is likely to take.
Baucus said his proposal is likely to cap benefits at “a level higher than the actual benefit that members of Congress receive today.” An employer-provided plan worth less than that level would remain tax-free, he said, while any benefit exceeding the cap would be taxed as ordinary income.
Such a tax, if adopted, would be phased in over “several years,” Baucus said. And it would be likely to “grandfather” in health benefits set as part of a collective-bargaining agreement, he said, allowing union plans to remain tax-free until new contracts can be negotiated.

So, if I read this correctly, the Senate is now looking at ways to tax some Americans, but make darn sure to exempt both themselves and labor unions from paying the tax.

Now, one of the reasons we are going through this whole exercise in healthcare reform is because labor union healthcare is so expensive for American manufacturers. Unions tend to get Cadillac plans, which they negotiate through collective bargaining. The cost of those plans is one of the big reasons that American car companies have gone broke.

So Senate Democrats, in order to find ways to pay for the very expensive healthcare plans put forward by the president, are looking at taxing healthcare plans, which the president specifically campaigned against last fall, while exempting both themselves and Big Labor, whose health plans have caused us to become less competitive internationally.

Sounds like a good idea to me. I say to the Democrats, please move that plan forward. It may be a big mess, but it is the kind of mess that will help Republicans regain the Congress in a couple of years.

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