Have Democrats Flip-Flopped on Taxing Health Benefits?
“Shakedown Schumer’s Extortion Racket”
Some Members of the Senate Finance Committee may be considering new taxes on health insurance companies to fund their version of health “reform.” While Democrats may believe that imposing windfall taxes on certain industries represents sound politics, many Members may note that it contradicts prior Democrat statements regarding the taxation of health benefits—and, by publicly attacking industries who dare to refuse Democrat demands for “concessions,” stands as a singularly poor attempt at public policy:
- Several Finance Committee Democrats held a news conference on Wednesday to criticize companies within the health sector for their “greed” and profits. Sen. Chuck Schumer stated that, “We need the insurance companies to step up to the plate and be part of the solution.”
- Press reports indicate that Sen. Schumer’s remarks were made as part of an attempt to impose approximately $100 billion in taxes on insurance companies to fund the Finance Committee’s health reform overhaul legislation.
- Economists of all political stripes agree that taxes such as those contemplated by Senate Democrats would not ultimately be borne by insurers. Press reports indicate that “[Senator] Schumer and others said they did not know how they would prevent insurers from simply passing the tax on to their customers in the form of higher premiums.” Thus imposing $100 billion in new “fees” on insurance companies, by Sen. Schumer’s own admission, would amount to a tax on health benefits—the same taxes which then-Senator Obama publicly attacked during his presidential campaign.
- Other news reports previously indicated Speaker Pelosi’s comments that “We will not be taxing [health] benefits in any bill that passes the House;” Education and Labor Committee Chairman Miller said yesterday that “you’re not going to get a tax on health benefits” in the House bill. However, the bottom of page 835 of H.R. 3200 includes the following language—in capital letters and bold-faced print—regarding the financing mechanism for a new Comparative Effectiveness Research Trust Fund:
CHAPTER 34—TAXES ON CERTAIN
INSURANCE POLICIES
- Speaker Pelosi’s comments notwithstanding, the House Democrat bill imposes billions of taxes on health benefits—all to fund a research institute whose conclusions and recommendations could be used by government health programs to deny access to life-saving therapies and treatments.
While some Members may support efforts to address the distortions caused by the current employee exclusion for health insurance premiums in the context of overall reform of both the tax and health care systems, Members may oppose what amounts to a windfall profits tax on private industry. Moreover, many Members may be strongly concerned by Senate Democrats’ apparent attempts publicly to browbeat private-sector companies into “voluntary” concessions—which amount to yet another unprecedented attempt by Democrats to consolidate government control of health care.