Health law bill includes nasty surprise, due in 2018

Congressman Stephen Lynch was against the President’s health reform proposal before he was for it, and now he thinks that Republican efforts to repeal the law are “a colossal waste of time.” Better, he says, to focus on improving it, especially to get costs under control. Meanwhile, speaking at a New England Council briefing this morning, he revealed (a surprise to me, anyway) that embedded in the 2500-page law, is a provision to tax Americans on the value of their specific health plans, starting in 2018. This, he says, is the first time in the country’s history such a tax has been levied.

According to the law, there will be a 40-percent excise tax on “excess benefit” health coverage, the additional coverage beyond a threshold amount ($10,200 for individuals or $27,500 for families.) This was referred to during last year’s debate as a tax on “Cadillac” health plans.  It may be imposed on the coverage provider, but it will undoubtedly be squeezed out of workers’ benefits and salaries in the final analysis.

As a result, Lynch notes, increases in wages over the ensuing years due to the recovering economy could well be “sucked up” by the imposition of this new tax (to the tune of $32 billion over ten years). In taxing the “excess” value of the health plan, the government would be penalizing those who have acted responsibly and provided decent coverage for themselves and their families. Workers like those at Gillette (in Lynch’s district) who have a “gold-plated health plan” will, he says, “get croaked.” Rather than impose this tax across the board, Lynch recommends a health care surcharge only for individuals earning $500,000 or more, or couples bringing in at least $1 million.

He says Congress should focus on containing health costs in other ways. For one thing, Lynch would eliminate the anti-competitive anti-trust exemption currently enjoyed by health insurance companies. (The only other industry exempted from anti-trust laws is major league baseball, but that’s a subject for another day!)

Another way Lynch would introduce more competition into the health sector is by creating a public option. He wouldn’t do it at a national level but would direct that states offer such a choice. Massachusetts could, for example, offer a low-cost, barebones policy the existence of which would force insurers to compete with that basic option. By doing it at the state level, the coverage would be geared to regional cost differences. Eventually, he figures, neighboring states in New England, with comparable cost structures, could have a regional public option.

Congress’ popularity, says Lynch, is “somewhere on the spectrum between the Taliban and swine flu.” And, this independent moderate Democrat who works across the aisle says regrettably it’s not apt to get any better given the election last fall of 89 new Representatives, half of whom have never even held elective office. They ran on promises that may not be wholly practical and don’t know how to compromise. One of those promises was to repeal “Obamacare.” Now that repeal has failed, the question is: can they function in a bipartisan way and work out some improvements to the new law and other issues? Let us hope. Otherwise, it’s going to be a very long two years.

Please let me know your thoughts in the comments section below.

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