Dem Senator Warns of 'Big, Big Tax' on Middle Class in Baucus Bill - The Note

From the blogs at ABC News: Dem Senator Warns of 'Big, Big Tax' on Middle Class in Baucus Bill - The Note.

Among other nice surprises – a 35% excise tax on "high cost" insurance plans. For an individual plan, the cut-off would be $8000. (I assume that's per year – per-month would meet my standards for "high cost".)

Insurance companies don't have huge bags of money sitting around. 35% of $8000 is $2800, which will have to come from somewhere. It will either be added to the price of the policy, or be reflected in reduced coverage, or some combination of the two.

It is also intended to apply pressure on the costs of policies, keeping them below a cost threshold. It will tend to have that effect, erecting a semipermeable price ceiling. One of the rules of economics which has held up against numerous attempts to break it is that price ceilings result in shortages. If you want a high cost insurance policy, perhaps because you're expecting some high cost medical problems, they'll be a lot harder to come by.