Needs Some Work
Sen. Baucus' proposal to impose a tax on high-end insurance plans is not too far from Obama's proposal early in the health-care reform discussion to tax the wealthiest income earners. I did not support that original idea and I am not very excited by the current proposal, either, but for different reasons.
According to the senator's proposal, insurance plans with premiums that reach a certain dollar threshold would be subject to a tax. One of the challenges with this idea is that the cost of medical care varies significantly from one region of the country to another. What might be a "Cadillac" plan in one area would provide only basic coverage in another region. The proposal would need to account for the disparity that exists.
Additionally, some people with higher premiums are not actually wealthy. In some areas of the country, unions have negotiated insurance plans for their members that have richer benefits and, as a result, higher premiums. The senator's plan would need to allow for these as well.
From the surface, taxing plans above a certain level would produce a needed revenue. After all, we have to pay for health-care reform somehow. However, the tax revenue would not be paid by the insurance companies but would be passed on in the form of higher premiums to businesses and employees--in some cases, to employees who can not afford it.
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