I has a bit of insomnia last night, and for some reason my thoughts drifted to the excise tax. I worried a bit about how something that is already framed as a tax on health care benefits would be a great campaign point for the GOP in 2010 and, even worse, a possible "Read my lips" moment for Obama in 2012.
So, I fretted and worried, and then began casting around for a solution. This is what I came up with, and I wanted to throw it out there for others who have a deeper understanding of the issues to ponder, comment, etc.
1. Throw the "excise tax" in the trash heap. Anything that has already been framed as a tax on health care benefits, esp. those that might reach the middle class, is political suicide.
I understand from TPM and other outlets that Obama's chief concern is the bring down heath plan costs with the tax. It makes some sense: employers/consumes will avoid higher costing plans that trigger the tax, meaning insurers will be compelled to lower their plan rates.
But this might work too:
2. Impose a "penalty" at the same rate as the now-trashed tax on any health insurer that charges above a certain threshold amount, say $24,000, for a plan.
Ah, but isn't this the same thing, you ask? Well, not really. First, on the surface, it's more direct. The health insurer doesn't wait for market competition (and all of its elegant yet unrealistic abstractions) to force down it's costs. Rather, they will decrease costs immediately to avoid the penalty threshold.
But, perhaps there would be concern (and GOP criticism) that health plans would just some how pass the cost to consumers. Well, two points: First, they can't ever charge more than the threshold rate, so we've got a cap on how high they can go. And, second:
3. Any insurer that attempts to pass along the penalty of a health care plan to the consumer(s) will forfeit the entire amount of the health care cost to the U.S. Treasury.
In other words, if an insurer charges $25,000 for a plan, gets hit with fee of $X, and then tries to spread that $X through higher co-pays, they have to give $25,000 to the feds. The prospect of a full cost penalty, especially aggregated, should be a big enough deterrent to prevent any pass through (and any charges of higher costs).
Of course, this might be hard to ferret out, so:
4. For any person who exposes pass through cost measures by an insurer, give them 10% of the forfeiture amount.
So, now we have a huge incentive for rank-and-file insiders (and perhaps numbers savvy consumers) to discover and rat out insurers that try to surreptitiously pass the cost of the penalty to the consumer. For example, if an insurance company is charging $25,000 and some employee blows the whistle, that employee gets 10% of that $25,000. That might not sound like a lot for someone that is worried about losing his/her job, but in the aggregate, it would be quite a nice severance package. If the insurance company is doing this to just 100 of its customers, that 10% of $2,500,000 -- or $250,00. So I think this creates the incentive to blow the whistle ... meaning that insurers will be scared out of their pants to even try to pass it through.
The only criticism I can think of is the GOP screaming "cost control!" or something like that. But I'd love to see them try pleading to voters that the poor insurance companies need to freedom to charge exorbitant rates.
Thoughts?
