Obamacare Dystopia - by Mark Steyn

May I be boring? Or, if you’re a regular reader, more boring than usual? Bear with me. There’s some eye-glazing numbers and whatnot.

In 2003, Washington blessed a grateful citizenry with the Medicare prescription-drug benefit, it being generally agreed by all the experts that it was unfair to force seniors to choose between their monthly trip to Rite-Aid and Tony Danza in dinner theater. However, in order to discourage American businesses from immediately dumping all their drug plans for retirees, Congress gave them a modest tax break equivalent to 28 percent of the cost of the plan.

Fast forward to the dawn of the Obamacare utopia. In one of a bazillion little clauses in a 2,000-page bill your legislators didn’t bother reading (because, as Representative Conyers explained, he wouldn’t understand it even if he did), Congress voted to subject the 28 percent tax benefit to the regular, good, ol’, American-as-apple-pie corporate tax rate of 35 percent. For the purposes of comparison, Sweden’s corporate tax rate is 26.3 percent, and Ireland’s is 12.5 percent. But just because America already has the second-highest corporate tax in the OECD is no reason why we can’t keep going until it’s double Sweden’s and quadruple Ireland’s. I refer you to the decision last year by the donut chain Tim Hortons, a Delaware corporation, to reorganize itself as a Canadian corporation “in order to take advantage of Canadian tax rates.” Hold that thought: “In order to take advantage of Canadian tax rates” — a phrase hitherto unknown to American English outside the most fantastical futuristic science fiction.

Ask yourself this: If you impose a sudden 35 percent tax on something, are you likely to get as much of it? Go on, take a wild guess. On the day President Obama signed Obamacare into law, Verizon sent an e-mail to all its employees warning that the company’s costs “will increase in the short term.” And in the medium term? Well, U.S. corporations that are able to do so will get out of their prescription-drug plans and toss their retirees onto the Medicare pile. So far just three companies — Deere, Caterpillar, and Valero Energy — have calculated that the loss of the deduction will add a combined $265 million to their costs. There are an additional 3,500 businesses presently claiming the break. The cost to taxpayers of that 28 percent benefit is about $665 per person. The cost to taxpayers of equivalent Medicare coverage is about $1,200 per person. So we’re roughly doubling the cost of covering an estimated 5 million retirees.

Now admittedly the above scenario has not been, as they say, officially “scored” by the Congressional Budget Office, by comparison with whom Little Orphan Annie singing “The Sun’ll Come Out Tomorrow” sounds like Morrissey covering “Gloomy Sunday.” Incidentally, has the CBO ever run the numbers for projected savings if the entire CBO were laid off and replaced by a children’s magician with an assistant in spangled tights from whose cleavage he plucked entirely random numbers? Just a thought.

This single component of “health” “care” “reform” neatly encompasses all the broader trends about where we’re headed — not just in terms of increased costs (both to businesses and individual taxpayers) and worse care (for those retirees bounced from company plans into Medicare), but also in the remorseless governmentalization of American life and the disincentivization of the private sector. As we see, even the very modest attempts made by Congress to constrain the 2003 prescription-drug plan prove unable to prevent its expansion and metastasization. The one thing that can be said for certain is that, whatever claims are made for Obamacare, it will lead to more people depending on government for their health arrangements. Those 5 million retirees are only the advance guard. And, if you’re one of those optimistic souls whose confidence in the CBO is unbounded, let’s meet up in three years’ time and see who was correct — the bureaucrats passing out the federal happy juice, or the real businesses already making real business decisions about Obamacare.

Can we afford this? No. Even on the official numbers, we’re projected to add to the existing $8 trillion in debt another $12 trillion over the next decade. What could we do? Tax those big bad corporations a bit more? Medtronic has just announced that the new Obamacare taxes on its products could force it to lay off a thousand workers. What do those guys do? Well, they develop products such as the recently approved pacemaker that’s safe for MRI scans or the InterStim bladder-control device. So that’s a thousand fewer people who’ll be working on new stuff. Well, so what? The public won’t miss what they never knew they had. So again the effect is one of disincentivization — in this case, of innovation.

If existing tax structures can’t cover the costs, what can we do? Start a new tax! The VATman cometh. VAT is Euro-speak for “value-added tax.” Americans often carelessly assume it’s merely a sales tax, but in fact it’s far more cumbersome than that, being levied at each stage “value” is added to a product or service. The consumer can’t claim back the VAT, but intermediate businesses in the production chain can. So self-employed individuals with relatively modest incomes wind up both charging VAT to their clients (25 percent in Scandinavia) and then claiming back the VAT they spent on the stamp and stationary they used to mail out the invoice. This is yet another imposition on businesses, taking time away from wealth creation and reallocating it to government paperwork. If the Democrats hold Congress this fall, I would figure on VAT sooner rather than later.

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