Taxation: Health Care Bill “Cadillac” Tax is Unreasonable; Economist Jonathan Gruber that Advocates for It Ignores Excesses of Insurance Companies

In the Washington Post, Economist Jonathan Gruber, provides an apology for applying a 40% excise tax on so-called Cadillac plans. He argues that since employer-provided health insurance is not included in an employee’s wages for income tax purposes, the excise tax is not a new tax. But as the insurance companies pass the amount of the tax to policyholders, that tax will reduce the amount of income available to the employee to save or spend.

The destructive underpinning of Gruber’s column is that the comprehensive plans (health, vision, and dental insurance) are disfavored such that people who hold them should be punished with taxation until they have to accept sub-par high deductible health plans. Instead of doing this, why not make comprehensive coverage the standard to follow?

Gruber’s view is jaundiced and unrealistic, and must be rejected, just like the Senatorial disaster being foisted on the public.

Gruber’s column fails to address critical issues which further invalidate his ideas presented in his column.

  • The Senate bill does not address the inefficiencies in the bloated bureaucracy of health insurance companies.
  • There is no public insurance program, thus no competition with private health insurance companies. It seems that Gruber’s tax should have been pared with a public plan. Since the Senate scrapped the idea, the public is left with a huge and destructive tax provision.
  • The Senate Bill does not contain any incentives for health insurance companies to control costs. The Senate bill is silent on to be expected spiraling insurance premium increases. The insurance company is not affected by the excise tax, like taxes assessed to cable companies, the expense will be passed on to the policyholder.