Taxes and the election

We, as voters, are confronted with two distinct theories of taxation in the upcoming election.  Our choice will frame our future, so let’s look back for guidance. Read more

“Qualified” insurance plans and the Constitution

I recently did a post on the constitutionality of Congress’s  plan to mandate that all have insurance or be forced to pay a tax.  That post got me thinking about other aspects of Obamacare.  One of the key provisions of all bills floating around Congress is that not only must you have insurance, but you also will have to participate in a qualified plan, or pay a tax.

Using the Kennedy-Dodd Unaffordable Health Choices Act as an example, Section 161 of Subtitle D (page 103) requires that, if you have individual health insurance, unless you have a “qualified” plan, a tax will be imposed upon you.

Ok, so what is a “qualified” plan?

Under Section 3103 (pages 62-69), the Secretary of Health and Human Services makes that decision based upon a report prepared by a Medical Advisory Council appointed by the Secretary.  In other words, if the Secretary decides that, for example, acupuncture must be included in all insurance policies sold in this country, then, unless your policy covers that, your plan is not “qualified”.  Should that be the case, you have two choices.  Switch to a more expensive plan (as it will be if it must cover acupuncture), or stay with your own plan and, pay a tax.

But, can Congress do this?  Can Congress (through regulations promulgated by the Secretary of Health and Human Services) tell you what services (or deductibles, or copays) must be in your insurance plan, and, if they are not there, you must pay a tax?

It seems to me that the powers of Congress enumerated in Article I, Section 8 of the Constitution would no more allow that than they would if Congress decided that you should pay a tax if you don’t eat “the right” foods, or wear “the right” clothes, or have too many (or too few) children.

No matter how well-meaning some think the overall health care proposals may be, these activities are personal in nature, and, beyond the reach of the federal government.  Simply put, if the federal government can’t reach those things, it can’t tax those things.

Will Congress take the health care pledge?

We already know from President Obama’s recent infomercial on health care that he wouldn’t dare subject himself or his family to the government health care “option” he is pushing.  But, what about Congress?

All versions of the health care legislation currently floating around Capitol Hill specifically exempt members of Congress from any requirement to participate.  Any sane person (looking at solely at those facts), should wonder why.  After all, we are told that the government option will provide health care as good, or better than what the President and Congress currently receive.

So, Sen. Tom Coburn (R. Ok.) proposed an amendment to the bill in the Senate Finance Committee that would require all members of Congress to participate in the government option.  The amendment passed, but don’t celebrate yet.  All Democrats, except three, voted against the amendment.  (I’ll explain at least 2 of those 3 in a moment.)  But first, let’s look at some of the Democrats who “wouldn’t be caught dead” in the government plan.

… Sherrod Brown and Sheldon Whitehouse won’t themselves join a plan that “will offer benefits that are as good as those available through private insurance plans — or better,” as the Ohio and Rhode Island liberals put it in a recent op-ed. And even a self-described socialist like Vermont’s Bernie Sanders, who supports a government-only system, wouldn’t sign himself up.

Something seems wrong here.  Senators Brown and Whitehouse write an op-ed piece they hope all Americans will read, extolling the virtues of a government health plan, but they refuse to be forced into joining it?  And, Sen. Sanders who wants only a government system, refuses to participate in that system?  Gee, why would that be?

Well, lets look at the Democrats who voted to join the government plan.  Two of the three Democrats who voted to subject themselves to it were Sen. Dodd (D. Ct.), and Sen. Kennedy (D. Ma.).  Senator Dodd is chairman of the Senate Finance Committee where the amendment was introduced.  Call me cynical, but, I strongly suspect that the requirement that Congress participate in the plan will “magically” disappear in the final bill, much like, under Sen. Dodd’s leadership, the AIG bonuses “magically” appeared in the Stimulus Bill.  When questioned about the disappearance, Sen. Dodd will look as shocked and amazed, as he did when questioned about the appearance of AIG bonuses. But, for the moment, I suspect, in the Senator’s mind, it is a great public relations move.

One Republican  refused to be compelled to join the government health care plan, Sen. Gregg (R. N.H.).  When asked why, he said the public option,

will be so bad that I don’t think anyone should be forced to join.

If Obamacare passes, what is now labeled the “public option” will, within ten years, become the “public mandate“.  It will be bad health care, but, unlike Congress, you will have no “option”.  You will be forced to join.

Coming soon…another government “entitlement” program

Not satisfied with the destruction of health care as we know it in this country, Congress is considering a massive new program that is sure to cost us lots of money.  The proposal, introduced by Sen. Kennedy (D. Ma.), will put the government into the disability insurance business.

Sen. Edward Kennedy plans a new disability-insurance program that would automatically enroll all American workers as part of the sweeping health-care bill he is preparing to introduce, aides said Friday.[emphasis supplied]

Here’s the plan.  All employees would have an extra amount of taxes (oops, I should have said premiums) deducted from their pay checks of “no more than $65 per month”.  An employee could “opt out”, but I suspect that won’t be easy.  And,

the money [collected by the government in under this program] would be put into its own separate fund, not available to other government spending.

Should you believe that last part, I have a nifty bridge in Brooklyn that I will be happy to sell.

Then, if an employee becomes

so disabled they cannot participate in at least two or three activities of daily living, such as eating, bathing or using the toilet,

said employee is entitled to a cash benefit of up to $50 per day.

But, here’s  the best part.

The new program is distinguished from private and public disability programs in that the disabled could collect benefits even if they are still working, and it could be easier to be deemed eligible. [emphasis supplied]


Let’s flash forward several years.

First, more and more employees will become “disabled”,  and the “separate fund” will become depleted.  So, the taxes (oops, premiums) of those participating will increase well beyond the “no more than $65 per month” amount.  Next, as more and more employees leave the system due to the increased “premiums” deducted from their pay checks, Congress will mandate that employees will no longer be able to “opt out”.  And finally, when even that can’t pay for the costs of this plan, you and I will be left with yet another “entitlement” program that is out of control, and which can only be supported by increased taxes.

This is the genesis of “entitlement” programs, innocuous at first, but lethal as time progresses.

The Kennedy Fortune is Safe

We’ve all heard about the estate tax, aka the death tax, which is a tax that the federal government levies when assets are transferred from a deceased person to someone else. So how does the super-rich work within the law to protect their family assets?

To be clear, the U.S. tax code is written so if the assets are transferred to a spouse or a charitable organization there is no tax. Also, there are credits against the tax that ensure assets up to $2 million dollars that are transferred to children, as an example, are not taxed. Read more