The Spanish-American War doesn’t get talked about a lot these days – there were no particularly memorable battles, heroes, or “damn the torpedoes” catch phrases. It was extremely short. They don’t make movies or TV shows about it, its memorial is at best underwhelming, and there is no Call of Duty: 1898.

The war’s most enduring legacy, however, is one of the best tax anecdotes there is. To help finance the war, Congress passed a federal excise tax on long-distance phone calls. It was sensible at the time from a supply standpoint (as a new technology, phones were an untapped revenue source) as well as demand (wars use stuff), but Congress – somehow – has let this little taxes legacy last longer than three month-long war: 108 years to be precise.

Now wars are bad and taxes are bad, but protecting your society from aggression is important so people mostly go along with it. However, Congress doesn’t just use wars to create a sense of urgency for taking people’s money and the unaffordable Affordable Care Act has been exploited to do just that. Right now we are witnessing the birth of a new tax – collected originally as a fee for a very specific purpose – the transitional reinsurance program. But some in Congress are proposing it be held by the Treasury to be spent however Congress sees fit.

When the left pushed through Obamacare without the support of the Republicans, one of the constituencies they needed to please was the insurance industry. Obamacare’s policies were likely to push more sick people onto their plans than healthy, increasing expenses, so the insurance industry did what any industry with a presence – and a few crony experts on staff — in Washington, DC would do — they attempted to arbitrage the situation.

Under this supposedly temporary program, insurance carriers and others would each pay a new fee into a government-run fund and then if a carrier took large losses on their sickest patients they would be reimbursed from the fund. However, just like a casino the government wanted a rake (the casino’s share of the action). Well, the fund has been running short (surprise) and CMS, instead of keeping the tax money, the rake, has been sending the “reinsurance” money back to the insurance companies. Since CMS has failed to secure the “rake,” Republicans in Congress have threatened to limit the payments back to insurance companies and possibly preclude the Administration from distributing the funds altogether.

The bill, the “The Taxpayers Before Insurers Act (TBIA),” would slash the Department of Health and Human Services’ (HHS) budget by 50 percent if HHS fails to transfer $3.5 billion to the Treasury rather than being used for the original intent (sound familiar?).

However, there is another side to this. In reality, the non-political world, the fee burden isn’t really born by the insurance companies, but passed on to their subscribers as a regressive tax. And to make matters worse, the fund itself does more to protect the insurance companies and the hospitals than the patient, who are also forced by Obamacare to buy insurance that then have to pay this extra tax on that very same insurance.

This cruel joke to taxpayers reminds me of a famous patent: A device to kick yourself in the butt.

Like the Spanish American War Tax, collecting the funds from subscribers and then placing the money in the general Treasury fund – TBIA – means codifying the fact that this fee is really just a regressive tax punishing people who buy insurance. The TBIA is the wrong approach. But apparently supporters of the TBIA hope that opposition to Obamacare is so strong that no one will notice if this measure passes that it will be one of the first tax hikes of the Republican controlled Congress.

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The right public policy solution is just to make sure this awful program doesn’t continue. The insured shouldn’t be asked to pay even more.

Ending the tax won’t lighten the – self-inflicted – burden on insurance companies saddled with high numbers of sick people. But, stopping the program and making sure that it sunsets is a must to ensure that the regressive taxes are stopped now and that the Republican fingerprints on this issue would be one of ending a regressive tax – instead of making it a new money funnel.

While the temporary reinsurance program is designed to expire, Congress has had a hard enough time releasing potential funding sources from its greedy clutches in the past; let’s certainly hope that Republicans don’t transform this “temporary” program into a permanent tax, leaving a 108-year legacy.

Charles Sauer, an economist, is the president of the Market Institute. Thinking of submitting an op-ed to the Washington Examiner? Be sure to read our guidelines on submissions.

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