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Obama’s Health Care Tax Explanation: Doesn’t Pass the Laugh Test

Posted By J.D. Foster, Ph.D. On September 30, 2009 @ 5:43 pm In Obamacare | Comments Disabled

The White House put out talking points [1]on Tuesday in an attempt to deflect the debate on the multitude of tax increases in the health care plan working through the Senate Finance Committee. These tax increases almost uniformly violate (again) the President’s plan not to raise taxes on middle-income Americans.

The White House asserts that fees on insurance companies, drugmakers, devicemakers, etc. won’t be passed on to consumers as a hidden tax. They offer three explanations.

“First, the fees are lump sum, not per unit, so you should not expect the manufacturers to pass them on”.

This argument does not pass the laugh test. Fees become costs and cost are passed on in higher prices. Apparently, the White House does not believe the accountants at these companies are capable of the simple calculation of spreading a fee over a number of devices or policyholders. And apparently the White House believes shareholders of these companies are willing to accept without reaction to the federal government digging deeper into wallets.

“Second, these fees are intended to recapture part of the benefits these businesses will get from reform, as they acquire tens of millions of new customers”.

There’s an old saying in money-losing businesses – we lose money on every unit, but we make it up in volume. The benefits the White House suggests are an illusion, similar to the fantasy that Obamacare will reduce costs.

“Third, the fees are all going to ensure that we are increasing the numbers getting affordable coverage and thus reducing the $1,000 hidden tax that millions of Americans pay for the uncompensated care of the uninsured”.

Notice how the White House is now accepting that the fees really are a hidden tax? But then they assert that the new hidden tax reduces an existing hidden tax. Just one thing conveniently left out: Obama’s reforms on balance are going to drive up health care costs so the hidden tax is on top of the higher net costs from Obamacare.

The White House is in full court press pouring out talking points and explanations, but these are nothing short of economic nonsense.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/09/30/obama%e2%80%99s-health-care-tax-explanation-doesn%e2%80%99t-pass-the-laugh-test/

URLs in this post:

[1] talking points : http://www.whitehouse.gov/blog/Word-from-the-White-House-Common-Ground-on-Health-Insurance-Reform/

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