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The Cadillac, Minivan and Chevette

Yesterday President Obama compelled Democratic leaders to drop their opposition to imposing the so-called “Cadillac Tax” on higher end insurance plans to help pay for the near $1 Trillion healthcare reform bill.  By his own admission he finds these plans pay too rich a benefit and cost too much, so why not tax them too.

Is it really a "Cadillac"?

47Cadilllace_425x282 I have lived in The Netherlands, Belgium, Germany and Sweden.  I know a little something about socialism, public health care and high taxes.  By the way, I now live in America!

Here is how it really works.

  1. Your payroll is taxed in the 45% – 60% range depending on the degree of socialism so that the government can pay for all their programs and entitlements.  Oh, and you also pay 15% – 20% “Value Added Tax”/ “Consumption Tax” on everything you buy with your after tax income.  More on some things like gasoline and liquor.
  2. You get the basic state sponsored health care coverage that does NOT provide you the service level you need or want.
  3. You then go to a “private” insurance company to purchase supplemental policy with your after tax income to get access to the health care services you really want and need.  Things like:
    • Private / semi-private room vs a bed on the ward
    • No-line /No waiting at a private clinic vs 6 month or 1 year+ waiting list
    • Top specialist vs public doctor the government could afford

If the things on the left seem more like your basic expectation for health care service level than the things on the right, then maybe this “Cadillac” is really a “Minivan” and the government  is talking about a “Chevette”.

You are going to want one of these so-called “Cadillacs” and you won’t want a "luxury tax" on them, because they are really just the functional and pragmatic “Minivan” you want and need.

Do you think the government should tax things that they define as excessive?

 

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