Whatever You Tax You Get Less Of

That's a fundamental law of economics, especially when it comes to Americans. They don't like taxes and are pretty creative when it comes to avoiding them.

Obamacare thinks it will get massive amounts of taxes from new assessments against "Cadillac" health plans. Innocent Bystanders thinks that within a couple of years of the enactment of this new law there won't be any "Cadillac" health plans:

The Senate’s version of the health care bill has several cost-offsetting measures, including (all cost savings are for 2010 – 2019):

• Penalty Payments by Uninsured Individuals ($15 billion);
• Penalty Payments by Employers ($28 billion);
• “Other Budgetary Effects” ($65 billion); and
• Taxes on ‘Cadillac’ Health Care Plans ($149 billion).

The Cadillac insurance plan tax is the largest source of revenue, and is larger than the CBO’s projected $132 billion deficit reduction from 2010-2019. But the CBO, though reputedly non-partisan, is not particularly reliable. Their near-term projections are often off by a factor of 2, and their long-term projections are meaningless.

One of the biggest faults is that they’re terrible at predicting market and legislative responses to policies, when they even bother to try. In the case of Cadillac insurance plans, it’s pretty clear that they didn’t try at all.

The Cadillac insurance plan tax levies a 40% tax on the amount of a premium over a threshold: for individual plans that threshold is $8500 and for family plans it’s $23,000. I don’t think it takes a genius to figure out that within a couple of years, compensation packages will adjust so that nobody is paying that tax. No more Cadillac insurance plans.

Of course, the real goal of Obamacare is to make it so expensive for businesses to provide coverage for their employees that they'll simply stop doing it, thus creating a demand for the "public option".

Liberals have long thought that they could simply raise taxes on businesses and corporations and those companies will just simply pay them out of their profits. Doesn't happen that way and never has. Companies adjust to new economic realities by either raising prices or cutting costs. They rarely allow taxes to change their profits.

It'll work the same with with health care mandates.