Inching Closer to the Health Care Overhaul On the Backs of Taxes and Fees

As the health care reform package works its way through Congress, it's a good idea to once again take a closer look at the kinds of taxes and fees that are going to make this whole thing "work."

Among the taxes that are intended to be imposed is a tax on tanning bed sessions.

The golden-glow lobby lost out to the tummy-tuck crowd when congressional Democrats chose their final victim for a vanity tax to help fund the health-care overhaul bill.

A 10% levy could be imposed on indoor tanning services this summer, bringing the total tax New Yorkers pay per session under the UV bulbs to 14.5%.

"That's not really right," said Phillip Yuill, 27, who was at City Sun Tanning in Union Square Saturday looking for a base tan before his vacation.

"It's a choice that I make that shouldn't cost me."

The tax could increase prices citywide by anywhere from $1 to nearly $10, depending on the type of sunbed package a customer chooses - and has salon owners and clients seeing red.

As I've repeatedly noted over the past several years, every time certain kinds of taxes and fees are imposed, the revenue expectations have overestimated the revenues, leading to major deficiencies. That is all too likely to happen here, meaning that the money will need to be made up elsewhere. After all, people who are intent to get tans will simply spend more time outdoors rather than spending time in tanning beds, meaning that the incidence of skin cancer isn't likely to decline, but the revenues aren't going to meet the needed projections.

Meanwhile, Newsweek seems to think that this health care package will somehow reduce the deficit even though the bill's 10 year projection requires 10 year of taxes and fees to fund seven years of actual health care reform. The expansion of insurance will only occur after three years of revenues are collected - precisely because the costs are so astronomically high once the program is fully implemented.

But one part of the bill that will raise quite a bit of tax revenue to fund this whole process is the tax on "Cadillac plans", which are the plans that are typically provided to union workers - teachers, automakers, and state workers. It's a 40% tax. These plans will be taxed beginning in 2018, if at all. The taxes are delayed precisely because these constituencies were strong enough to delay the tax. What is to say that they wont be further delayed. And each year's delay means that the structural imbalances in the health care proposal will become more pronounced.

So, if you're reading the CBO report and wondering how they can say that the budget deficit will be reduced, it's because they've assumed that various laws will change on schedule, including the Cadillac plan provisions. If that portion of the plan doesn't get enacted in its current version, the budget is thrown out of whack.

At the same time, there's the issue with the fact that this wont actually expand insurance to millions that don't already have it for at least three more years. There's merely an expectation that it will do this - you will not simply get health insurance once this law passes, and that's the one part that the proponents have sought to downplay, rather than highlight that the tax changes are coming well before the insurance coverages for the millions who currently do not have insurance.