Could a tax on health care premiums, applied to both businesses and individuals, slow the increase in health insurance premiums? It seems implausible, but indeed it could. Here's why:
As part of a universal health care bill passed by Congress, if a 7% or 10% tax is slapped on top of the monthly premium, that would create an additional incentive for both corporations large and small, and individuals, to shop around and seek a better offer. Perhaps these parties will even negotiate to keep the monthly premium the same or ask for a reduction, knowing full well that any premium increase will automatically be 7% or 10% higher. That might provide more of an incentive for businesses and individuals to slow the growth in health care spending.
The free market at work
Further, the tax might also prompt insurers to wring more inefficiencies out of the insurance system and/or decrease their profit margins, out of concern that they may lose business in subsequent years by having their premiums priced too high.
The tax could be phased-in over three years: for a 10% tax, it would be 3% in the first year; followed by 7%, then 10%.
Funds from the tax would help subsidize health insurance premiums for those citizens in the United States who otherwise would not have health insurance: the poor, working poor, and low-income working families.
The premium tax would have the additional advantage of redistributing income (in the form of a health care benefit) from higher-income citizens to lower-income citizens, thus decreasing, in a small way, the maldistribution of income in the United States, and helping to equalize benefits - each of which will strengthen U.S. society.
Financial Editor Joseph Lazzaro is writing a book on the U.S. presidency and the U.S. economy.
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Reader Comments (Page 1 of 1)
7-30-2009 @ 3:20PM
BHarrison said...
Come on . . . this article is total propaganda. The major leading problem and costs of health insurance is driven by the high costs of medicine and mdical services which is in essence being controlled and dictated by the paharmaceutical corporations. Just about everyone in the health care industry that I have talked to agree that it is the paharmaceutical corporations who are orchestrating the exorbitant medical costs. And the pharmaceutical corporations have TWO LOBBYISTS in Washington, D.C. for every Congressman. These B.S. articles that do not address the basic facts behind all of this are nothing moe than cheap propaganda to delude the public from knowing the truth and pressuring their Congress about these matters. This article is a red herring at best.
7-31-2009 @ 10:04AM
Orin Black said...
Are you crazy, we are already trying to keep the health care premiums as low as possible to avoid paying more and reducing our profits, or having to ask employees to pay more, and losing good people.
How would the additional burden of a tax help? Add additional pain to the already painful experience??
So let's see, then the higher the premiums went, the more money the government would get. Who is benefiting here? What is the purpose here, run everyone out of business?
7-30-2009 @ 4:01PM
Iridium said...
"Funds from the tax would help subsidize health insurance premiums for those citizens in the United States who otherwise would not have health insurance: the poor, working poor, and low-income working families."
THE POOR DON'T NEED HEALTH INSURANCE. THEY DON'T PAY FOR HEALTH CARE. IT IS PROVIDED TO THEM BY THE GOVERNMENT!!!!!!!!!!!!!!!!!!!!!!!!!!!! IT'S CALLED MEDICAID DAMMIT AND IT COSTS US OVER $1 TRILLION PER YEAR!!!!!!!!!!!!!!!!!!
A PERSON WITHOUT A JOB CAN WALK INTO THE EMERGENCY ROOM AND RECEIVE $30K WORTH OF CARE AND NOT HAVE TO PAY A DIME. STATE AND FEDERAL PROGRAMS PAY THE COST.
THERE IS NO SUCH THING AS AN UNINSURED POOR PERSON. IF YOU MAKE UNDER $12k AS AN INDIVIDUAL AND $18k WITH ONE DEPENDENT ALL COSTS WILL BE PAID FOR IN NEARLY EVERY STATE.
THE AVERAGE PERSON ON WELFARE RECEIVES MORE THAN $50,000 IN BENEFITS EVERY YEAR!!!!!!!!!!!!!!!
MY FRICKIN GOD, HOW MANY TIMES DOES SOMEONE HAVE TO SAY IT!!!!!!!!!!!!!!!!!!!!!!!!!!!
9-10-2009 @ 8:03PM
Konstipher said...
I don't know the pros and cons to taxing insurance premiums. But I pay $700 a month for healthcare, paying $770 would not solve my families problem. I remember Senator John Mccain purposed this same idea, but President Barack Obama insisted it would not work. Now, Democrats think its a good idea?