Dueling Republican and Democratic Plans in Connecticut

Connecticut's Governor Rell has also come out with a "Charter Oaks" health plan.

Basically, she hopes to attrach a private insurance company to offer coverage for $250 per person to all adults between 19-64. The claim is that the only costs to the state will be administrative and marketting, so one wonders why insurance companies how haven't done this already would be willing to do it now. Perhaps she is expecting the democrats to add premium support and doesn't want to be the one to propose significant spending as a bargaining position.

She and the Dem House leader have raised questions about funding for the more significant State Senate proposal. Senate President Don Williams has said everything, including tax increases are on the table. They could raise income taxes. They could follow the Governator's model of taxing doctors and hospitals and then returning them the money in higher medicaid payouts. But why tax the part of medical care we like (actual services), which may be passed onto those who need the care, instead of taxing the costs we don't like. Here's a proposal:

Let's levy a 20% tax on insurance companies on all premiums that don't go directly to service provision. Unlike the hard floor of 85% for services the Governator proposed, this would allow some flexibility for insurance companies to achieve efficiency, while giving them an incentive to do so and raising revenue to boot.