Here in Washington, people are discussing two things: Jim Zorn’s job security as the Washington Redskins’ head coach and health care, in that order. But there’s a $3.6 trillion gas tax on the table that already passed the House and is making its way through the Senate, and cap and trade has Americans all over the country concerned. The $3.6 trillion gas tax figure, which includes gasoline and diesel gas, comes from a new report from Senators Kay Bailey Hutchison (R-TX) and Kit Bond (R-MO) on the effects of climate change legislation. And the energy tax has rippling economic effects, as Senators Hutchison and Bond explain in their Washington Times op-ed:
Americans will be double-hit by the gas tax when it raises the costs of goods and services such as groceries and utilities they must continue to purchase. Energy costs are among businesses’ top operational expenses already. While companies face a variety of energy expenses, ranging from heating and cooling their work space to powering equipment and lighting, operating their vehicles is the most costly. Every company, from the small-town local florist to a package delivery service with nationwide operations, will be hard hit. In order for these businesses to withstand the heavier tax burden and to remain profitable, they will be forced to pass these energy cost increases along to consumers through higher prices.”
Some industries are more energy-intensive than others, and farmers and ranchers are hit particularly hard. Heritage Senior Policy Analyst Ben Lieberman writes, “In addition to higher diesel fuel and electricity costs, prices for natural gas-derived fertilizers and other chemicals will also rise. Everything else affecting agriculture, from the cost of constructing farm buildings to the price of tractors and other farm equipment, will also go up.”
According to the Hutchison-Bond report, U.S. farmers and ranchers will incur higher fuel costs of $550 million in 2020. That figure will jump to $1.65 billion by 2050. According to The Heritage Foundation’s cap and trade analysis, farm profits are expected to decline by 28 percent in 2012 and will be an average 57 percent lower from 2012-2035. Congress is attempting to buy the farm vote by touting them as the beneficiaries of a carbon offset program because farmers can use cleaner technology, reduce nitrous oxide emissions, or simply not grow crops. However, the revenue gained from offset revenue will pale in comparison to lost income from cap and trade.
Economic gains and environmental improvements aren’t mutually exclusive goals; in fact, they often go hand-in-hand. Hutchison and Bond say, “We can improve the environment and economy through American ingenuity and technological advancement, not with taxes and mandates that increase costs and burden American families and businesses.”
Instead, cap and trade significantly reduces the amount of resources the private sector can invest in newer, cleaner technology.
The full report is available here.
Americans love having options. From the food we eat to the cars we drive, we relish making our own choices based on our preferences and what is best for ourselves and our families. Health care should not be an exception. Yet the proposals put forward by the Obama administration and the Democratic congressional leadership would create a massive government plan for health care and crowd out the choices Americans expect.
A federal government takeover of our nation’s health care will limit, if not eliminate, an individual’s options in insurance and delivery. That does not mean “no” is the answer to reform, either. Texas leads the nation in the number of uninsured, which raises the premiums and property taxes for those who are covered. And many families who want insurance do not have access to affordable choices. Now is the time for other approaches. And states can play an important role.
Fortunately, there are promising market-driven, consumer-directed solutions to health reform that beg a closer look. One such innovation is the health exchange.
Under the current system, most employees are presented limited options regarding their coverage — and their choice is to take it or leave it. However, the health exchange places all the decision-making power into the hands of the consumer. A state-level health exchange would allow consumers to compare plans at a single shopping point. Just as many travel Web sites are a commercial compendium for multiple airlines, a health exchange is an online marketplace for health insurance coverage options. Plan information is presented in a standard format, and consumers can complete an electronic application and enroll online. A hallmark of a health exchange is that it utilizes minimum government input and maximizes private competition and consumer choice.
The benefits to consumers are clear. Participation is elective, and employees can choose the coverage that best meets their needs. Their premium contributions are made with pre-tax dollars if they are part of a company unit. Workers who do not qualify for employer-sponsored health coverage, such as part-time or contract employees, could be eligible to receive an employer contribution toward their health insurance. The employer’s set contribution would be applied to the premium cost, and the employee would pay the difference.
A health exchange would streamline coverage for families with both spouses employed by allowing contributions from multiple employers to be pooled and applied to a single insurance plan that is best for their household. It could eliminate gaps in care because plan benefits are portable from job to job, provided that both employers participate in the exchange.
The approach is also profitable for employers. A defined contribution system dramatically simplifies their role in health care coverage, reducing an employer’s responsibility to setting the contribution rate for its staff. The approach would cut administrative costs and labor, as employers would no longer face the cumbersome task of selecting benefit structures, insurance companies or provider networks, and negotiating a single plan that works for all of their employees. Additionally, making a contribution instead of paying a defined benefit allows employers to plan for future costs and budget accordingly.
Health exchanges make sense for American businesses and workers, as well as for the U.S. health care system. According to the Heritage Foundation, “State-level health insurance exchanges would increase health insurance coverage, significantly lower prices in the individual coverage market … and increase employers’ flexibility in offering health benefits.”
The state of Utah has experienced early success in implementing an exchange, which has provided enrollment options that are best for its citizens. The health exchange allows states to incorporate and build on private solutions, and facilitate consumer choice based on price transparency, not government regulation and control. And as consumers are given the opportunity to make informed choices, competition will increase, which results in lower consumer cost and simplified offerings — eliminating the need for a government option or co-ops.
The health exchange is a valuable model for Texas to follow. It keeps the government in its appropriate role of facilitating innovative private market solutions. And it places the decision-making power exactly where it should be — in consumers’ capable hands.
The views expressed by guest bloggers on the Foundry do not necessarily reflect the views of the Heritage Foundation.