Political Cortex: Brain Food for the Body Politic

"Within three years of its implementation, according to the Congressional Budget Office, the tax would apply to nearly 20 percent of all workers with employer-provided health coverage in the country, affecting some 31 million people.  Within six years, according to Congress's Joint Committee on Taxation, the tax would reach a fifth of all households earning between $50,000 and $75,000 annually.  Those families can hardly be considered very wealthy."

So what is the likely ripple effect?  This is money that is not expected to be raised directly.  Those who have studied the proposal predict that few people will be paying this tax.

What is the likely result of this consequence?  As Herbert points out, "(R)ather than fork over 40 percent in taxes on the amount by which policies exceed the threshold, employers (and individuals who purchase health insurance on their own) will have little choice but the ratchet down the quality of their health plans."

What can we anticipate to go by the boards as a result of this process?  Dental and vision care are two prospective examples, along with expensive mental health coverage.

We then arrive at some bureaucratic tap dancing that Herbert refers to as "suspension of disbelief."  According to the Congress Joint Committee on Taxation, less than 18 percent of the revenue will come from the tax itself.  

The result of the $150 billion, more than 82 percent, will stem from income taxes paid by workers who have been given pay raises by employers who will have voluntarily handed over money saved by offering employees less valuable health insurance plans.

When Herbert asked AFL-CIO President Richard Trumka about the likelihood of this scenario actually occurring, he replied following laughter:

"If you believe that I have some oceanfront property in southwestern Pennsylvania that I will sell you at a great price."