NCPA - National Center for Policy Analysis

WHY TAX BOTOX?

December 10, 2009

Cosmetic medicine is one of the few well-functioning components of the American health care market.  Freed from the third-party payment structure that complicates incentives in the "real" health care market, cosmetic procedures trade like normal services, says Forbes.

Consider:

  • Sellers compete on price and quality; buyers comparison-shop for the best deal.
  • New treatments start off expensive and fall sharply in price as they become more widespread.

Now, the Senate wants to tax cosmetic medicine to help pay for health care.  Unlike the other taxes contained within the bill, there is no logical link to health care reform, says Forbes:

  • Taxing elective medical procedures won't affect the cost of insurance-covered care, and so won't help to bend the cost curve.
  • The tax also is not an offset for benefits that cosmetic surgeons will receive from expanded coverage.
  • The only plausible reason for the tax is that Botox is a politically easy target.

The political logic is impeccable, says Forbes:

  • The American Society for Aesthetic Plastic Surgery reports that Americans had 11.5 million surgical and non-surgical cosmetic procedures in 2005, 86 percent of them women.
  • Put another way, every year over 280 million Americans don't spend any money on these sorts of procedures, so political opposition to the tax will be low.
  • Taxes on unpopular minorities -- whether smokers, rich people or the surgically enhanced -- are politically easy to impose and increase.

Source: Josh Barro, "Why Tax Botox?" Forbes, December 7, 2009.

For text:

http://www.forbes.com/2009/12/07/health-care-botox-sin-tax-opinions-contributors-josh-barro.html 

 

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