Dissembling on HealthSource Tax


This Kathy Gregg article on Governor Gina Raimondo’s reaction to poll results showing a new HealthSource tax to be hugely negative should not slip through the cracks.  The results of the poll found 63% opposed to the tax and only 27% in favor.  Here’s Raimondo:

“It’s out of my hands. I can’t say we are not going to have the health exchange,” Raimondo told reporters Thursday, the morning the poll results were released.

“Obamacare is what is is, the Affordable Care Act is there. I had nothing to do with it. [But] we have to implement it … and pay for it. And what I tried to do is present a proposal to the General Assembly which would put the least amount of cost on business owners for the maximum amount of benefit.”

Well, no.  It’s not out of her hands.  Handing it over to the feds means that “we” — i.e., the state government — are not paying it.  True, either way, Rhode Island health care customers will be paying the bill, but the distinction between the state and federal governments is not immaterial, not the least because of the games government officials are playing with the numbers.

“So we can either give it to the federal government or we can do it,” Raimondo said, again characterizing her proposal as one that “makes sure we run it in Rhode Island at a cost which is equal to or lower than the federal government.” …

In calendar year 2016, House fiscal staff advised lawmakers the new surcharge — that Raimondo describes as a “health reform assessment” — would be 4.74 percent for individuals and 0.98 percent for small businesses. During the next fiscal year, which begins on July 1, 2016, individuals would pay an extra 3.76 percent, and small-employers 1.05 percent to raise $11.2 million.

Kathy Gregg compares this with a 3.5% federal fee that would raise $8.6 million, but that isn’t an apples-to-apples comparison.  The federal 3.5% is applied to plans in the exchange and then spread out to all health care customers with similar plans.  In other words, the effective rate for the to people actually paying would be much lower.

The HealthSource tax, by contrast, starts with the budget for the exchange and then applies its 4.7% and 1.0% fees to all plans.  In the federal case, the federal government carries all of the risk for cost overruns, because its fee is set by law.  In the state case, the state government carries all of the risk, and the director of HealthSource can just adjust the tax as she sees fit.

I’d also take issue with the assertion that “business owners” are hurting and need that lower rate.  Are individual health consumers not hurting, or are they just not organized enough to be a political problem?

  • D. S. Crockett

    An article this morning on Drudge reported Hawaii has joined Oregon, Massachusetts, Maryland, Vermont, New Mexico and Nevada with failed Obamacare Health Care Exchanges. Hawaii has spent so far $205 million trying to make it work, but their legislature has wisely refused to pass legislation bailing out the failed exchange. However, Hawaii will spend another $30 million to transfer the exchange to the Feds. What makes RI politicians so confident they can make it work here while so many others have failed? I suppose they don’t want to cut jobs for their relatives and friends who no doubt make up the majority of the exchange’s employees so the taxpayer be damned yet again.

  • ShannonEntropy

    Gina and the Statehouse pols are NOT ever gonna turn the exchange over to the Feds … cuz they are all on the payroll of the two-opoly health ins·cos we have here

    Compare similar plans, Rhodent·care vs MassHealth … the one here costs at least *five times* as much as the one in Mass. Not to mention ‘our’ Plans have much Much higher deductibles & co-pays

    The money to pay off the pols and keep the ins·cos’ execs’ seven-figure salaries in place has to come from *somewhere* — and that would be from YOU, health exchange customers

  • Max

    Very Chafee-esque.