Posted on 06/06/2007 8:50:55 PM PDT by NormsRevenge
The Legislature's lawyer has issued an opinion concluding that the new sources of revenue proposed in Gov. Arnold Schwarzenegger's ambitious health care plan are taxes, rather than fees.
The opinion could make it a lot more difficult to pass the plan. Any new tax requires approval from two-thirds of the Legislature, which would require Republican votes. Republicans have vowed to oppose any taxes.
If the new revenue sources are deemed to be fees, they can be approved by a simple majority vote, which would allow passage with only votes from Democrats.
As part of a plan to cover 6.5 million uninsured residents, the Republican governor has proposed a 4 percent fee on employers with 10 or more workers who don't provide coverage to their employees, a 2 percent fee on doctors' gross revenues and a 4 percent fee on hospitals' revenues.
The governor argues that these are fees because they do not go to the state's general fund. "This is a fee because it's money from the health care system going right back into the health care system," said Sabrina Lockhart, a press aide to Schwarzenegger.
But a deputy legislative counsel, Linda Dozier, concluded in a May 30 opinion that all the revenue sources are taxes because they didn't go to a program that directly benefits either the employers or the health care providers.
"It is our conclusion that the charges proposed to be assessed against certain employers, physicians and surgeons and hospitals by Governor Arnold Schwarzenegger's health care proposal would, if enacted, constitute a tax," she concluded.
The opinion made a critical distinction between Schwarzenegger's proposed employers' fee and a 2003 law passed with an employer's fee, Senate Bill 2.
Senate Bill 2 would have imposed a fee on large and medium-sized businesses that didn't cover their workers, but all the money would have gone to a special fund to cover those workers.
By contrast, the governor's plan would send the money assessed against employers who don't cover their workers to a program to subsidize insurance for low-income residents. The money wouldn't necessarily cover the workers of an employer who didn't provide health insurance because some workers might not be eligible for subsidies.
"We discern no special benefit to employers from the proposal's provisions that would be funded by the employer contribution," the opinion concluded.
The opinion also concluded that doctors and hospitals would "realize no special benefit from the proposal nor would a nexus exist between the activities or operations of these providers and the problems addressed by the proposal."
Schwarzenegger argues that doctors and hospitals would benefit from his plan in the form of higher reimbursement rates for caring for the state's poor. Under his plan, the fees on their revenues would be used to supply the state's share of the funds needed to secure federal matching funds to raise rates that providers get from Medi-Cal, the state/federal insurance program for the poor.
The opinion, issued at the request of Assemblyman Rick Keene, R-Chico, certainly won't be the last word on the question. But it could provide ammunition for Republicans who have been insisting that the new revenue sources are taxes, not fees.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
They get very flustered whenever you even say the word “taxes”, especially in the Health Care thing.
The logic goes like this: the uninsured are a “hidden tax” on the system already, so all we’re doing is charging a “fee” to make up for the “hidden tax” that’s already there, see?
Got that straight now? I knew you would. /s
Sorry, Arnold:
Tax vs Fee ????
Even when you put lipstick on a pig, it is still a pig.
“Tax vs Fee ????”
Taxes are tax deductible for the most part. When you give $100 of purchasing power to the government, it only cost you about $75. With fees, it costs you about $125 to give the government $100 in purchasing power. Thus we should fight new fees even more tenaciously than we fight new taxes!
This bill is DOA, and has been. So is single payor. The chatter is all for show and scripted, worthless fodder for the Sacto reporter beat.
Nunez’s bill might get somewhere, but it needs about 3 months of hard work if its ever going even close to passable. Even then, the taxes, err... “fees” should be shocking.
Perata’s bill is a nightmare, which is why many will vote for it.
All of which will ultimately be borne by consumers as the businesses, doctors and hospitals raise their prices to cover the "fees." It's nothing but income redistribution masquerading as universal health care.
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." - Manuel II Palelologus
Spending has risen faster under SchwartzenKennnedy than it had under Davis. Our governor is a fraud and we are as doomed today as when this fraud was elected.
I voted for McClintock. He was always the best choice.
Well, at least he'll never be president (despite the push by some to change the law so he can run). Even without the law, the base would never let him be nominated (likewise for John "I love illegals" McVain).
This healthcare issue doesn’t tax/fee individuals, but businesses.
To a business, a fee is a business expense and reduces profits, having the same result as a deduction, so the distinction you make doesn’t matter in this case.
The important point is the one the Legislature’s lawyer has made — it is a tax because it doesn’t directly benefit the people paying it. It is pure wealth redistribution. I hope it really is dead.
I don’t understand how ANYONE can think Healthcare is somehow exempt from the laws of supply and demand.
The only control on rising prices is the immediacy of them. If you create a disconnect that makes goods or services appear less expensive than they really are, you are guaranteed to increase demand. Increasing demand is what triggers sellers to raise prices. Health insurance is a major reason for increased healthcare costs.
This whole move to force employers to provide health insurance is a move in exactly the wrong direction. The best thing we could do to make healthcare less expensive is to reduce demand by making people feel the cost more immediately. If employers stopped providing health insurance, but gave the money they were spending on it as increased wages, people would buy the insurance that suits their lifestyle.
Bush’s proposal on this back in January was brilliant IMO.
We need an attorney to tell us that money, taken involuntarily from private individuals by government, is a tax?
The question was whether it was a TAX or a FEE.
The distinction is important, because it requires more votes in the CA legislature to pass a tax than it does a fee.
It isn’t always an easy distinction to make. A hunting permit charge is a FEE — because it directly benefits the person paying. It is NOT a tax even though the hunter wouldn’t choose to pay it if he wasn’t forced to.
It would take a simple majority in the Legislature to pass a huge increase in the FEE for a hunting license.
It would take a super-majority to pass an increase in the TAX on gasoline, sales, phone, cable, income, etc.
Thanks for your perspective.
Maybe we should double the number of medical schools and thus the number of doctors and nurses, and then costs would drop.
As long as something appears “free” to the people consuming it, demand will always outpace supply.
Suppose that automakers suddenly started producing 3 times as many new cars as they do now. And suppose the price people had to pay for them dropped to 10% of current prices.
Do you really think people wouldn’t have 5 cars each ?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.