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Question of the Day
The plastic surgery tax could increase the cost of nips and tucks by imposing a 5 percent tax on the cost of such surgeries. The tax is slated to go into effect Jan. 1 and is expected to raise $5.8 billion over 10 years. It would cover all elective procedures, whether covered by insurance or not, but would not be levied on surgeries intended to repair personal injuries.
Some of the taxes are already running into political trouble with Democrats’ core supporters.
The Teamsters union on Thursday blasted the proposal to impose a 40 percent excise tax on “Cadillac” high-value health insurance plans, saying it would threaten the benefit-rich coverage unions have fought hard to win for their workers.
“Any claim that it affects only ‘Cadillac’ plans and thus the wealthy is misleading,” said Teamsters President James P. Hoffa Jr. “This tax will fall on one-third of Americans in 10 years. … The idea that this tax will curtail rising premiums is just dead wrong.”
The tax is slated to go into effect in 2013 and would apply to individual policies worth $8,500 or family policies worth $23,000. A slightly higher threshold would apply for early retirees and those in high-risk professions.
Budget analysts said they expect that employers and consumers will start to ditch the high-value plans and instead pay the money to workers in higher wages and salaries, so most of the nearly $150 billion in revenue on which Democrats are counting from the provision would come from higher income taxes.
“Put a tax on my high-premium health plan and suddenly it’s not such a good deal,” said Roberton Williams, a senior fellow at the Tax Policy Center. “I’d rather have the cash.”
Several relatively small tax increases will be aimed at health savings accounts and medical savings accounts. One will change the definitions for medical expenses that qualify as itemized deductions. Another will raise the penalties for withdrawing funds from these vehicles. A third would limit health-related flexible spending arrangements.
“All of these changes are designed to make health savings accounts less attractive and cripple consumer-directed health care plans,” said Michael Cannon, director of Health Policy Studies at the Cato Institute. Altogether, they would raise about $20 billion through 2019.
Jennifer Haberkorn and S.A. Miller contributed to this report.
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