Ship of Fools (UPDATED...please scroll to bottom of post)

If you want it bad and you want it fast, that’s usually how you are going to get it.

House Democrats on Tuesday unveiled sweeping health-care legislation that would hit all but the smallest businesses with a penalty equal to 8% of payroll if they fail to provide health insurance to workers.

The House bill, which also would impose new taxes on the wealthy estimated to bring in more than $544 billion over a decade, came as lawmakers in the Senate raced against a self-imposed deadline of this week to introduce a bill in time for action this summer.

Senators face a tougher battle because they are striving for a bipartisan bill. Key senators are weighing a combination of several more-modest fund-raising provisions, including some new fees on health-care industries.

Under the House measure, employers with payrolls exceeding $400,000 a year would have to provide health insurance or pay the 8% penalty. Employers with payrolls between $250,000 and $400,000 a year would pay a smaller penalty, and those less than $250,000 would be exempt. Certain small firms would get tax credits to help buy coverage.

There are a few things that jump out at us immediately in reading through the article.

The health-care legislation, we were promised, would have to pay for itself. That $544 bil though covers only half of the $1 trillion price tag given to health care reform by the CBO (and as anyone involved with government acquisition, as we are, knows, the eventual price tag NEVER comes in under the initial estimate).

Also, there is the Atlas Shrugged factor. At a time when the government should be doing (or not doing, as applicable) everything they can to foster a positive climate for small and medium-sized businesses, they are doing precisely the opposite with this bill.

Where is the incentive to expand one’s business when it may possibly mean paying a higher punitive tax? There isn’t. In fact, there is the very real possibility that companies will be shedding payroll to avoid the tax penalty. Yes, health care reform = more unemployment. So, you now have a situation where that $544 billion is not being recovered because of a shrinking tax base combined with the benefit of higher unemployment at small and medium-size businesses. Hey, but at least everybody's covered...

...until they're not.

Let’s say a company that does provide health insurance for its employees crunches the numbers and decides that paying the tax penalty is actually cheaper than what it costs to cover its employees and the employees’ families.

Higher unemployment, a recession-deepening hostile business climate and more uninsured workers, all at the summer session lightning speed that could only be accomplished by the most ethical Congress, evah!

(UPDATE #1):

A group of Democrats on the tax-writing Senate Finance Committee on Wednesday called for health insurers to pay fees worth up to $100 billion over a decade to help pay for the overhaul of the U.S. healthcare system.

You read that correctly. The government is forcing private insurers to fund the "competition". But at only a $100 bil, they would still be about $400 bil short of the CBO's most-likely-underestimated $1 trillion mark. Stand by to stand by.
H/T: KT