Sunday, January 20, 2008

Republican Foot Dragging on Healthcare for Kids

Health and Human Services Secretary Mike Leavitt said health care issues are divisive. Funny, I thought issues were issues. However, people's approach to them could be divisive. Take children's health insurance and taxing private equity fund mangers as recent examples.

Why won't Congress act to provide coverage for children as health insurance coverage becomes increasingly unaffordable for millions of working parents? Their "government run healthcare" rationale for denying expanded insurance doesn't bear out in reality. Most state CHIP plans are provided by private insurers. So what's the real reason?

It seems they don't want to ask others to pay their fair share, via taxes. Hospitals call the part of the bill not covered by insurance, patient responsibility. Instead of taxes, we should call our payments to the government, citizen's responsibility.

Who's not paying their fair share? Private equity managers pay 15% taxes on carried interest, vs. regular tax rates on income. While Congress debated this inequity, it choose to do nothing to correct the malformation in our tax code. Democrat Chuck Schumer helped block efforts to have rich PE managers pay their fair share.

An infamous private equity underwriter, The Carlyle Group, just announced the sale of affiliate CDM Resource Management for $655 million. The PEU purchased the company in May 2003 for $50 million, giving it a $605 million profit. Taxed at the old capital gains rate of 20%, Carlyle would pay $121 million to Uncle Sam. But with George W.'s lowering of the rate, the PEU will pay less than $91 million, an over $30 million savings. How many kids could be covered with those funds?

But will the Democrats really take on private equity? My Eight Ball just returned the verdict. Signs point to "no". The question is how long children will go without health coverage so the candidates can continue gorging at the campaign money trough?

No comments: