" Are You an Indigo? Discovering Your Authentic Self " The Book by D Michael Waller

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Friday, October 9, 2009

Must Read: Dangerous Secret in the Baucus Health Care Bill


NEW YORK (Fortune) -- Now that the Congressional Budget Office has concluded that the health-care bill proposed by Sen. Max Baucus will shrink the federal deficit over the next ten years, its champions are heralding the legislation as a model of fiscal responsibility.
But the CBO's comforting analysis relies on a big assumption that's highly questionable, an assumption that virtually no one on either side of the debate -- politicians, pundits, even economists -- is even challenging.

The assumption is that America's employers will keep providing coverage for their workers. But, in fact, the Baucus bill severely undermines the employer rationale for offering insurance. Economist Michael Tanner of the conservative Cato Institute points out two main reasons.

First, the Baucus bill would substantially increase the costs of coverage, for example by requiring rich benefits packages and coverage for Americans with pre-existing conditions at far less than their actual expense. At some point, employers will decide that the appeal of offering insurance as a tool for recruiting and retaining employees no longer compensates for its soaring cost.

Second, the bill is based on perverse incentives that no one is even discussing. The subsidies it offers to citizens are so rich that if companies were to drop their plans, the majority of workers would get the same lavish coverage, and extra cash in their paychecks to boot. "Those two factors will change the equilibrium," says Tanner. "With the government providing huge credits, employers will feel a lot less guilty about dumping their plans."

In fact, the Baucus bill is practically inviting employers to do just that: It imposes a fine of just $400 per employee on companies that shed their plans.

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