There's been a lot of talk in Washington, DC lately of a "new, centrist compromise" gaining momentum in terms of how to fund health care reform, and that is taxing health care benefits. The problems? It's not new, it's only centrist in the bizarre inside-the-Beltway world of what qualifies for centrist, it's one sure way to make health care reform incredibly unpopular, and it's a bad policy idea. Remember how popular Ira Magaziner's "health alliances" were in the Clinton health reform battle? This would be worse. So let's go through this point by point:
1. It's not new. The idea of taxing workers' health benefits has been around for a long time, a staple of Republican health policy for at least a generation. It was, as many of you will no doubt remember, part of John McCain's health care reform plan. In fact, it was the part of McCain's health care plan that was polling so poorly that the Obama campaign spent over $100 million worth of TV ads attacking the rich.
2. It's not centrist except in the bizarre world of inside-the-Beltway land. Seriously, it is only in the odd nether-world of special interest-dominated Washington, DC that a policy widely unpopular with the general public in every poll, one where the winning presidential candidate spent over $100 million in campaign advertising attacking, could ever be considered as a credible "centrist" solution to anything. The reason this is possible is that centrism inside-the-Beltway has nothing to do with what real voters think, and everything to do with wealthy special interests and contributors happy. Centrism in DC basically equals corporatism -- doing what's good for big business. Rather than do the simple, more popular (with the voter, as opposed to the big business lobbyist) thing of paying for health care reform with progressive taxes, having wealthier taxpayers and businesses pay their fair share, as President Obama has proposed, the DC version of centrism says "Hey, let's increase taxes on hard-pressed middle-class people who work for a living."
3. It's unpopular. When a presidential campaign picks one policy of their opponent to run more ads on than any other, it is because that policy is a particularly vulnerable area for them with voters. The reason Barack Obama's campaign ran so many ads against McCain's proposal to tax health care benefits is that most people hate the idea. When asked whether health care reform should be funded by taxing health care benefits in a recent poll, only 19% favored the idea, while 77% opposed. Over half, 52%, strongly opposed the idea. On the other hand, paying for health care reform through the progressive tax plan proposed by Obama was favored 62%-35%.
4. It's bad policy. That whole trickle-down, never-tax-the-rich thing is fundamentally failed policy, and the idea of actually increasing the financial burden on hard-pressed working families whose out-of-pocket health care costs have been going through the roof makes no sense. For families with an income of $50,000, they have lost ground in the recent decade, with incomes rising hardly at all while energy, education, grocery, and health care costs have risen dramatically. It makes no sense to dramatically increase their tax burden.
The kind of special interest centrism that comes up with tax-the-health-benefits policy "compromise" is classic DC establishment: in order to avoid offending wealthy contributors and special interests, let's be "centrist" and making middle-class families pay the bill. This is exactly the kind of politics that Barack Obama came to Washington to change.