President Bush gets something right.... (Taxes/tax breaks shift health costs) [ed.]

[treis]

@Renob

There really isn’t a “crisis” of uninsured. There is a small percentage of people who cannot afford insurance. The media has played up this issue and politicians, as is their usual habit, feel the need to “do something.”

40 million uninsured people is a lot more than a small percentage, and it certainly is approaching crisis.

[Renob]

@treis

40 million uninsured people is a lot more than a small percentage, and it certainly is approaching crisis.

Yes, it is a fairly small percentage, especially when you consider that a lot of them could afford health insurance if they chose. In that 40 million figure there is also a significant portion (up to 2/3, according to the Congressional Budget Office) who only lack insurance for part of the year (I surmise this is due to changing jobs). There is no “crisis” of the uninsured.

[DMC]

@Weirddave

First of all, the only industry publication I was referencing was an article I was reading on how much businesses pay for benefits. That’s where I got “less than 5% of policies cost more than $15K”. That’s all I was referring to with that comment.

The White House claims that the number is 20%.

As for the rest…What you are saying doesn’t agree with the information in the link I posted, or anywhere else for that matter. It’s not what the NYTimes article you linked says. Where are you getting your information? Do you have a source?

The White House states “At the same time, health insurance would be considered taxable income. This is a change for those who now have health insurance through their jobs.” In other words, you will now pay tax on your costs completely, not just on costs over 15k. On the back end, they will give families a tax break on your first 15k in compensation, or 7.5k for singles.

So, it sounds like a tax break, albeit quite a bit of a smaller one than if your costs remained pre-tax, which is what the OP seemed to be stating. Unfortunately, they also plan on increasing the deduction yearly based on the CPI. Insurance doesn’t generally increase in line with the CPI, by any stretch of the imagination. I can easily see us paying quite a bit more than 15 (or 20k) by the year 2019. There are several assumptions also being made by them that go against every thing we know about the health insurance industry, such as “The standard deduction for health insurance will encourage more people to buy insurance in the individual market. As more people join the individual market, the market will become more competitive and prices will come down.” Hell, even if more people did sign up, you’ll have a hard time getting most of us to believe that prices would actually drop.

It just sounds like a solution looking for a different problem than the one we’re actually facing.

[Renob]

"For example, between half and two-thirds of the people who experienced a period of time without insurance in 1998 had coverage for other portions of the year. " – Congressional Budget Office

[DSeid]

This is a tentative step in the right direction. The problem is that we will need several major steps to get there and this is just a baby step.

The employer-based model is a fatally flawed intrinsically inefficient system which increases the cost of healthcare in this country. Because of it, and the payroll tax exemption that healthcare benefits have, we all are subsidizing the purchase of the most expensive healthcare insurance for those who make the most, and those who make the most get the most subsidy. What Bush is doing here is proposing that we incrementally decrease the amount of that subsidization and use that money to help make health insurance that much less unaffordable to buy on your own.

How it came from Bush I cannot fathom!

Now combine this into a fuller plan:
[ul]
[li]Mandatory health insurance coverage[/li][li]Incremental tax credit based on need to help make it affordable[/li][li]Elimination of the payroll tax subsidization of health insurance purchase[/li][li]Insurance company reform such that any particular plan of benefits must be offered at the same price to all comers, whether part of Megacorp or individual purchaser, pre-existing condition or not. No cherry-picking allowed. F air playing field on price vs product.[/li][li]Expansion of the safety net program for the truely poor.[/li][/ul]
Now you got something.

[scotandrsn]

As far as I can tell, the plan is for my employer to pay monies to my health insurer, and I get to pay the new taxes on the transaction, instead of either of those parties.

[DSeid]

Just to flesh out out how much the government currently subsidizes the purchase of healthcare insurance - http://www.ahrq.gov/news/press/pr2006/taxsubpr.htm

Total Federal and State tax subsidies for employer-sponsored health care coverage for active workers will exceed $200 billion in 2006, an inflation-adjusted increase of more than 150 percent since 1987, according to a new study sponsored by the Department of Health and Human Services (HHS) Agency for Healthcare Research and Quality (AHRQ).
…
The average subsidy per worker in companies with 1,000 or more employees will be $1,886, compared with $770 per worker in firms with fewer than 10 employees.
The average subsidy per covered worker in establishments where more than half the employees earn more than $23.07 per hour will be $3,283, compared with $2,268 per covered worker in establishments in which the majority of employees earn less than $10.43 per hour.

Higher pay equals more tax subsidization for healthcare insurance purchases. But of course those not purchasing healthcare with pretax dollars receive no subsidy at all, are not buying the insurance product at the volume purchasing discount given to Megacorp and if buying healthcare without insurance are the only ones being asked to pay full retail. “Only in America!”

Recommended reading: http://www.nchc.org/materials/studies/reform.pdf

If we are going to subsidize healthcare insurance purchasing, should it be at least equally subsidized to all purchasers, not more subsidy to those who make more?

[Voyager]

@Renob

"For example, between half and two-thirds of the people who experienced a period of time without insurance in 1998 had coverage for other portions of the year. " – Congressional Budget Office

From a Census Bureau Press Release:

Health Insurance Coverage

Overview

* The percentage of the nation’s population without health insurance coverage remained unchanged, at 15.7 percent in 2004.

* The percentage of people covered by employment-based health insurance declined from 60.4 percent in 2003 to 59.8 percent in 2004.

* The percentage of people covered by government health insurance programs rose in 2004, from 26.6 percent to 27.2 percent, driven by increases in the percentage of people with Medicaid coverage, from 12.4 percent in 2003 to 12.9 percent in 2004.

* The proportion and number of uninsured children did not change in 2004, remaining at 11.2 percent or 8.3 million.

Race and Hispanic Origin (Race data refer to those reporting a single race only.)

* The uninsured rate in 2004 was 11.3 percent for non-Hispanic whites and 19.7 percent for blacks, both unchanged from 2003. The uninsured rate for Asians declined from 18.8 percent to 16.8 percent.

* The uninsured rate for Hispanics, who may be of any race, was 32.7 percent in 2004 — unchanged from 2003.

* Based on a three-year average (2002-2004), 29.0 percent of people who reported American Indian and Alaska native as their race were without coverage, higher than the rate for native Hawaiians and other Pacific islanders (21.8 percent) and for those of other race groups, but lower than that of Hispanics. Comparisons of two-year moving averages (2002-2003 and 2003-2004) showed that the uninsured rates for American Indians and Alaska natives and for native Hawaiians and other Pacific islanders did not change.

If people are uninsured by choice, you would not see these differences by ethnicity. Things have gotten worse since 1998 in any case. Even if they are the same, we have 13 - 20 million people uninsured for the entire year. That the rest are insured for part of the year is not a great comfort if they get sick while uninsured. If this happens when they are unemployed, it seems unlikely they will be able to afford to get insurance in the interim.

You say a lot can afford health insurance if they so chose. Any support for that statement, such as showing the cost would be a reasonable percentage of their income? Or maybe they should forego luxuries like food and clothing?

[Voyager]

@scotandrsn

As far as I can tell, the plan is for my employer to pay monies to my health insurer, and I get to pay the new taxes on the transaction, instead of either of those parties.

It sounds like that, though complicated, the claim that only insurance of over $15K is taxable is true. Now, the question is whether you need to itemize to get the deduction, which would make the tax form more complicated for lots of people. But the real issue still is that “subsidizing” self-purchased insurance fby making it not taxable helps the rich a lot more than the working poor.

[pantom]

If I’m understanding all of this correctly, it is a major step in the right direction. As pointed out above, and as I figured out more than a decade ago, the big winners in the current mess are people who work for large corporations and make large salaries. These are precisely the wrong people to get a large break, but there you are. Once I figured this out I embarked on a determined, and successful, fortunately, campaign to make myself a highly-paid corporate employee. Stupidest thing I ever did from the POV of personal job satisfaction, but I didn’t think I had a choice, since the older you get the more you need health care, so working for smaller employers with more interesting work to do didn’t seem like a realistic way to go. As for working for yourself, well, if you do that you get no break at all, which is supremely stupid.
So, by giving a break to people who do work for themselves, while at least beginning to limit the subsidy that large-salaried corporate drones get, this is, as I started out saying, a big step in the right direction.

[Steve_MB]

@pantom

Once I figured this out I embarked on a determined, and successful, fortunately, campaign to make myself a highly-paid corporate employee.

So, you’re one of those self-hating successful people, who considers the rewards of hard work to be “winning life’s lottery”, the fruits of which should be taken away and redistributed?

[Cheesesteak]

I just went onto the president’s website for more details, this looks like a better deal than I first thought. You don’t get to deduct the cost of your insurance premium, you deduct $15,000 (for a family) regardless of the cost of your insurance premium.

Right now an insurance policy on the individual market or the non-group market, if you’re just going to get your own family policy, the average cost of one of those policies right now is about $5,200.

Take a family earning $60,000 in the 15-percent income tax bracket, 15-percent payroll tax bracket, if they are currently uninsured and they go buy insurance, under the current system it costs them $5,200 today. Under this system in 2009, once it phases in, they get $15,000 of compensation tax-free. They’re paying 30 percent marginal tax rate on that, so that’s $4,500. That’s a huge chunk of the cost of an insurance policy out there. So it makes insurance much more affordable for those people.

That $5200 policy costs a net of $700, big savings.

This is not going to help families who are very poor, they don’t pay enough in taxes to begin with for a tax break to help fund insurance. However, families who pay a few thousand a year in taxes will get a lot of that back with a $15,000 deduction which should fund a high percentage of the cost.

I forsee a lot of low cost / high deductible plans coming out just to take advantage of this. You don’t get the big deduction if you don’t buy health insurance, I would consider that a HUGE incentive to buy something, anything, that is lower cost than the taxes you’d save, and you get catastrophic coverage, which is way better than nothing.

link to the press briefing

[Debaser]

I’m another one who just doesn’t get it. I didn’t get it during the speech last night and I’m even more confused after reading that article.

The proposal is to add a tax to people who pay more than $15,000 for their plan, but to give everyone else a $15,000 tax break even if they don’t pay that much?

So, if I’m paying $20,000 I have to now pay taxes on $5K but I get a $15,000 new deduction? Doesn’t that just cancel eachother out?

What exactly are the qualifications for getting the $15,000 deduction? You must have some kind of insurance, but the amount you pay doesn’t matter? So, can I start up Debaser Insurance, Inc. We offer no bennies at all ever and the cost is $1 a year. Go ahead and sign up and you get a $15,000 tax deduction?

[Debaser]

@Cheesesteak

I forsee a lot of low cost / high deductible plans coming out just to take advantage of this.

Damn it! You stole my idea.

Expect to get a lawsuit from Debaser Insurance, Inc.

(We’re a litigious company.)

[Bridget_Burke]

President Bush’s Saturday radio address was devoted to health care, and officials have put out the word that the subject will be a major theme in tomorrow’s State of the Union address. Mr. Bush’s proposal won’t go anywhere. But it’s still worth looking at his remarks, because of what they say about him and his advisers.

On the radio, Mr. Bush suggested that we should “treat health insurance more like home ownership.” He went on to say that “the current tax code encourages home ownership by allowing you to deduct the interest on your mortgage from your taxes. We can reform the tax code, so that it provides a similar incentive for you to buy health insurance.”

Wow. Those are the words of someone with no sense of what it’s like to be uninsured…

What’s really striking about Mr. Bush’s remarks, however, is the tone. The stuff about providing “incentives” to buy insurance, the sneering description of good coverage as “gold plated,” is right-wing think-tank jargon. In the past Mr. Bush’s speechwriters might have found less offensive language; now, they’re not even trying to hide his fundamental indifference to the plight of less-fortunate Americans.

But, what does he know?

(I got a “temporary” membership in Times Select just to capture this column. If you’re a member, check it out.)

[Renob]

@Bridget Burke

But, what does he know?

Actually, Krugman does not know much. His ridiculous assertions have been constantly debunked, especially in his analysis of health care issues. I couldn’t find one for this article, but here’s a link to an analysis of a recent health care article illustrating just how much Krugman gets wrong: http://www.spectator.org/dsp_article.asp?art_id=10890

[elucidator]

Yeah, nothing like input from a non-partisan, unbiased source. Like Spectator. For instance.

…Always be wary of lefties promising massive government benefits that will cost less…

I will. 'Cause those lefties, lying and weaseling all the time, yeah, got to watch out for them. 'Cause, you know, they play kinda a fast and loose with the truth.

[Renob]

Fine, disregard the obviously partisan language. However, you can’t deny that they effectively refute Krugman on the facts.

[elucidator]

I won’t deny that they claim to. And I certainly won’t deny that they’ve convinced you. But, then, you already were pretty much convinced before you read the article, no? Its not like the scales fell from your eyes and you were driven sobbing from your dearly held opinions by the sheer force of logic.

[Renob]

@elucidator

I won’t deny that they claim to. And I certainly won’t deny that they’ve convinced you. But, then, you already were pretty much convinced before you read the article, no? Its not like the scales fell from your eyes and you were driven sobbing from your dearly held opinions by the sheer force of logic.

In general, due to a variety of other columns exposing Krugman’s falsehoods and errors in logic, I tend to view pretty much everything Krugman says with skepticism. The specific facts referenced in the article, however, were new to me.

And you sound a bit skeptical. Care to elaborate why you feel the Spectator article is flawed?