CBO report: new taxes will balance Baucus health care bill

Those pushing the Senate health care bill were ecstatic when the Congressional Budget Office reported that the bill “would result in a net reduction in federal budget deficits of $81 billion over the 2010-2019 period.” But it’s more budgetary legerdemain, as Cato’s Michael Tanner pointed out today.  Tanner notes that new health care taxes are the revenue-raising tools:

The bill imposes a 40 percent excise tax on health-insurance plans that offer benefits in excess of $8,000 for an individual plan and $21,000 for a family plan. Insurers would almost certainly pass this tax on to consumers via higher premiums. As inflation pushes insurance premiums higher in coming years, more and more middle-class families would find themselves caught up in the tax.

In fact, overall, the tax increases in the bill are more than double the amount of deficit reduction. This isn’t a health care efficiency bill or a cost containment bill. It is a tax and spend bill, pure and simple.

The CBO report clearly states that the “savings” come from new taxes:

. . . net revenues from the excise tax on high premium insurance plans, totaling $201 billion; penalty payments by uninsured individuals, which would amount to $4 billion; penalty payments by employers whose workers received subsidies via the exchanges, which would total $23 billion; and other budgetary effects, mostly on tax revenues, associated with the expansion of federally subsidized insurance, which would reduce deficits by $83 billion.

It’s not surprising that policymakers and pundits ignored that statement. After all, everyone knows that spending more billions will save billions.

Tagged as: Baucus, budget deficit, CBO report, excise taxes, health care, penalty payments, revenues, Senate, Taxes