May 12, 2006 10:44AM

They Don’t Call It Taxachusetts for Nothing

In the Boston Herald, I wrote that Gov. Mitt Romney’s new health reform law includes “not just [an] individual mandate but also some hefty tax increases.” Romney’s secretary of health and human services, Tim Murphy, responded with a letter to the Herald claiming that “the law includes no new taxes to accomplish its objectives.” 

Oh, really?

  • The individual mandate is itself a tax on Massachusetts residents. Their freedom to choose not to purchase health insurance has been replaced by a tax equal to half the price of a typical insurance policy. 
  • The $295 per‐​employee levy on employers who do not offer coverage is another tax. 
  • There is a mandate (i.e., a tax) on employers that they set up what is called a Section 125 plan. (This is necessary to participate in the “connector.”)
  • If an employer has an uninsured worker who runs up a huge hospital bill, the employer must pay a tax of up to 100% of hospital charges in excess of $50k. 
  • The law includes a “slacker mandate” (another tax) that requires insurers to cover dependents up to the age of 25. That tax gets passed on to everyone through higher premiums. 

I have personally expressed to Murphy admiration about what the connector attempts to do. However, the connector tries to remedy a federal problem (the federal tax treatment of health insurance) at the state level. Massachusetts might as well try to reform the FDA

Thus even the “good” part of this legislation is a costly distraction from real health care reform.