February 4, 2016

OBAMA TO PROPOSE UNDERMINING OBAMACARE?: Yep, you read that right. The Washington Examiner is reporting that President Obama’s budget proposal is expected to include a narrowing of Obamacare’s so-called “Cadillac tax” of 40 percent on benefits-rich health insurance plans.

Writing in the New England Journal of Medicine, Council of Economic Advisers Chairman Jason Furman and chief economist Matthew Fiedler wrote that the budget, to be published next week, will propose raising the threshold for the cost of plans affected by the tax.

The change, they wrote, will prevent the tax from “creating unintended burdens for firms located in areas where health care is particularly expensive.”

The Cadillac tax was made law as part of the funding for Obamacare. It is also intended to slow the growth in health care costs created by the existing incentives in the tax code. . . .

While the tax is popular among economists, it is opposed by unions that have bargained for costly expensive plans as well as by business groups such as the U.S. Chamber of Congress and is generally viewed unfavorably in Congress. Congress voted in December to delay the imposition of the 40 percent excise tax from 2018 to 2020.

No one ever thought the Cadillac tax was politically sustainable, long-term, precisely because of the vigorous opposition by unions, who give so generously to Democrats every election cycle.  So it was always a “fake” revenue raiser for Obamacare. The problem, however, is that the Cadillac tax is one of the largest revenue sources within Obamacare–an estimated $108 billion over a ten-year period.

When you narrow, or eliminate, this revenue source, suddenly Obamacare becomes much more expensive than the rosy “deficit reducing” bill of goods sold to the American people. As Obama told the American people in his address to a Joint Session of Congress on health care in September 2009:

And here’s what you need to know.  First, I will not sign a plan that adds one dime to our deficits — either now or in the future.  (Applause.)  I will not sign it if it adds one dime to the deficit, now or in the future, period.  And to prove that I’m serious, there will be a provision in this plan that requires us to come forward with more spending cuts if the savings we promised don’t materialize. . . .

Now, add it all up, and the plan I’m proposing will cost around $900 billion over 10 years — less than we have spent on the Iraq and Afghanistan wars, and less than the tax cuts for the wealthiest few Americans that Congress passed at the beginning of the previous administration.  (Applause.)  Now, most of these costs will be paid for with money already being spent — but spent badly — in the existing health care system.  The plan will not add to our deficit.

Of course, this promise–that Obamacare would not add to the deficit–was completely false. But when you begin to narrow or repeal Obamacare’s major revenue-raising provisions such as the Cadillac tax, the deficit problem grows even worse.

Don’t get me wrong: I’m certainly not advocating for keeping the Cadillac tax, or any other provision of Obamacare. The whole thing was a massive, ill-considered jumble from day one, and it should never have been rammed through Congress via reconciliation. We are all now literally paying the price of such a raw political maneuver.

But when the namesake of Obamacare begins to propose repealing/narrowing the most significant revenue generating provisions of his own (only) major legislative achievement, you know something is seriously rotten in the state of Denmark. Obama is (predictably) throwing a bone to the Democrats’ union constituency, but it only emphasizes how Obamacare was and still remains, at its core, nothing but a stinky pile of crony capitalist payoffs to every single affected sector of economy. Even Obamacare’s Cadillac tax “punishment” of high-value union health plans turned out to be a ruse.

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