AP NEWS

Taxing insurance to pay for the state’s shortfall

February 27, 2019

No one likes paying taxes.

But taxes at a very basic level ought to be fair. As a secondary consideration, taxes perhaps should encourage healthy habits or at least punish bad habits. Thus, in our lifetime, taxes on cigarettes, alcohol and gambling have all increased — and increased again.

One of Gov. J. B. Pritzker’s tax ideas is to levy a $390 million tax in Managed Care Organizations. The money, in turn, would be used to help fund Medicaid in Illinois.

Here’s the reality. Illinois is the worst state in the Union when it comes to paying its Medicaid bills. Medicaid varies by state. What this fundamentally means is that throughout the years — Illinois has promised more than other states and paid less.

So, there is something basically wrong when you take your problems and decide to make someone else pay for them.

What will insurance companies do if they are taxed? They will pass those taxes on to their clients as increases in premiums.

We could not find a hard number of the amount of Illinois residents under managed care, but an estimate by consumers.org says that one in five Americans are in some form of managed care. If you do the math, it comes out to about $150 per person under managed care — or $600 for a family of four.

This is taxing the responsible (those who have paid throughout the years) for the benefit of the irresponsible (the state that has failed to pay its bills).

It will be an invisible tax. It might even be a popular tax since it will have no consequences for most of us. Make no doubt, though, it’s an unfair tax.