According to the AP (via Yahoo):
The Republican presidential nominee-in-waiting has proposed that everyone buying health insurance get a refundable tax credit, $2,500 for individuals and $5,000 for families. At the same time, he would treat employer contributions toward health insurance like income, meaning workers would have to pay income, but not payroll, taxes on it.
The article discusses that the proposal, if enacted, would have a detrimental effect on employer-provided health care plans. Seems that younger, healthier employees would opt out of those plans and choose individual plans, leaving older, sicker workers in the employer plans.
I think the employer plans are doomed for another reason: the taxation of the employer contribution. Employee benefits such as these have been tax free for as long as I can remember, provided certain criteria is met. To have employees pay taxes on the benefit is, to me, an inducement for them to leave the employer system.
Who benefits from this? Why, that would be the insurance companies. The cost of individual insurance is significantly higher than that of group plans, mainly because of the risk. When writing a group policy, insurance companies are able to spread the risk amongst the group members, but when writing an individual policy, only the risk of that insured is considered.
Another point: it appears from reading McCain’s website that the tax credit he proposes will not apply to individuals who have employer-sponsored health insurance. Another incentive for employees to leave those plans.
If, by some chance, John McCain is elected, we have to make sure that the Democratic-controlled Congress doesn’t buy this garbage. It’s truly a dumb idea.
(thanks, spotter)
VIVIAN J. PAIGE | All Politics is Local 
Not really. It is rooted in fairness. The rules are designed to make sure that employers don’t discriminate in favor of highly compensated or key employees. That’s the price to be paid for deductibility.
The alternative is non-qualified plans – and no tax deduction. Or, like in the case of group term life insurance, the company-paid premiums for coverage in excess of a certain amount are considered income to the employee.
“That’s the price to be paid for deductibility.”
Are we talking about deductibility (corporate taxes) or pre-tax premiums (personal taxes)?
Anon,
To your earlier point, we already have “socialist” health care programs; they are called Medicare, Medicaid and the most socialist of them all: the VA. We have unemployment insurance. We have Old Age Survivorship and Disability Insurance (OASDI), otherwise known as Social Security. Do you want us to scrap all those programs too and go back to the Gilded Age of American History? If so, the Republicans aren’t for you. You should be voting Libertarian.
Every industrialized country in the world, except us, considers health care a basic right of its citizenry. And they ensure that all their citizens have access to it through some government mechanism. And all of these countries have lower Mortality-amenable-to-health-care rates than we do; we have the highest. In previous history here, government had no involvement in health care, and we see how well the free market took care of that problem. Free markets are not the best mechanism of providing public goods (which is also why we have public highways, and the only reason we have transcontinental railways is because the government so heavily subsidized it).
Mouse – the answer is both. Non-qualified plans are not pre-tax nor are they deductible by corporations.
tx2vadem – you are correct.
tx2vadem,
First, I consider Medicare, Medicaid, and Social Security to be unconstitutional. The SCOTUS decisions declaring them constitutional are laughable. (Writing under threat of court-stacking, the SC had to come up with some bravo sierra in the written decision, since logic was not available.)
Second, under the current system, the Libertarians have no chance of winning. So the logical course of action is to work in the party that more closely matches one’s political philosophy, and try to steer it the way you want it to go. The socialists have done exactly that, and with great success, in the Democratic Party.
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“Every industrialized country in the world, except us, considers health care a basic right of its citizenry.”
So what? You have the right to own a gun, too. Should the government (i.e., taxpayers) buy you whatever gun you want? You have the right to an abortion, too. Should others be forced to pay for your abortions? You have the right to travel freely in this country. Should others be forced to buy you a car or a train ticket?
I agree with the statement that, “health care [is] a basic right.” However, that does not allow one person to take from another to acquire it, any more than a person without a gun may steal one from someone who has two, just because he has a “basic right” to have a gun. One has a “basic right” to life, but one cannot steal from another, no matter how rich he is, to buy food, nor can one break into another man’s house for shelter.
Being a “basic right” means only that the government cannot take it away from law-abiding citizens, not that the government (the taxpayers) must provide it to you.
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“Free markets are not the best mechanism of providing public goods (which is also why we have public highways, and the only reason we have transcontinental railways is because the government so heavily subsidized it).”
We’re not talking about public goods, but private goods — an individual’s health care. Individuals can buy health insurance, can pay for an operation, can buy medication, etc., and do so all the time.
The Constitution is very specific: “The Congress shall have Power… to pay the Debts and provide for the common Defence and general Welfare of the United States.” Congress has no more power or obligation to provide for my personal welfare than it has to pay my personal debts or provide for my personal defense.
So, Vivian, if it were not for our insane income tax system, more small companies could provide health insurance for their employees.
Anon,
Don’t know if you missed this, but Republicans were the ones who added the largest benefit to Medicare since it was created: Medicare-D. So much for working within the party, huh? But I would love for you to change the party platform and run candidates that are for dismantling those programs and are very vocal about it.
Do you know what the US was like prior to Teddy Roosevelt’s administration? That was unfettered capitalism, and what did our society look like? How did the average American live? That’s the ideal you want to return to?
What I meant was for the public good, not public goods. That was my mistype.
There are 47 million Americans without health insurance. Premiums are so prohibitively high that many small employers can’t provide it to their employees. And the cost of treatment is so high that not everyone can afford it. So, you are mistaken in claiming that individuals (implying all individuals) can pay. There are a substantial number that just show up to emergency rooms, receive treatment, and then don’t pay. The consequence for the rest of us is higher medical expense to cover them. Not to mention we have poorer health outcomes as a society despite being the wealthiest country in the world. And we pay the most per capita for health care, it consumes more and more of our GDP every year. That can’t continue. Free markets aren’t fixing that problem. The private industry, the AMA, insurance companies, giant multi-national pharmaceuticals, that you view as omnibenevolent or able to best solve this problem, have done nothing but make the problem worse.
I mean under your Draconian ideal, we would never have eradicated small pox. Because governments were the primary mover there, not the private industry. We can go back to pre-1910 American society as you wish, and mortality rates will be astronomically higher. You’ll just have to avoid travelling outside your gated upper-crust community lest you catch a communicable disease.
Oh! And to your last post to Vivian about the tax system, we could eliminate the income tax code and small employers wouldn’t necessarily up the benefits they provide their employers. More likely income disparity would shoot up and even more people would be without health care.
OK, I’ll ask again. No one ever answers, but I’ll keep tying.
I am a health care provider. Please explain to me how you or anyone else acquires a RIGHT to my labor? I was under the impression that we had abolished slavery.
And, yes, if you can compel me to provide that labor at less-than-market prices it is still at least partial slavery.
Tex,
I am aware of Part D. I have already said that I do not agree with the Republicans on all positions. I do not expect you to agree with the Democrats on all positions, either. Still, the Republicans, in general, at least give lip service to more things that I agree with than the Democrats do. We have two choices, bad and worse.
It was Franklin, not Theodore, who implemented the New Deal. In any event, was Europe so much better — armed to the teeth and about to start a World War (from which we saved them)? How was the Socialist Utopia, the USSR? How were China and Japan? Right, they were at war, too. Well, the USSR and China kept going down that path of socialism of which Democrats are so fond, and how did they fare? How’s socialist North Korea doing?
As for the “47 million Americans without health insurance,” let us first say that the very Census Report from which that number comes says that that number is an overestimate. Furthermore, 20% of them were NOT Americans: http://www.nchc.org/facts/coverage.shtml
Some of those people simply chose not to buy insurance. If you go to the first reference, Table 6, you will see that 14.4% of people with household incomes between $50k and $75k were uninsured, and 8.5% with household incomes over $75k were uninsured. Are you telling me they cannot afford insurance?
“There are a substantial number that just show up to emergency rooms, receive treatment, and then don’t pay.”
So they DO get treatment!! Yes, hospitals are required to treat people who cannot pay, which amounts to de facto catastrophic coverage. Isn’t that what you want?
“Not to mention we have poorer health outcomes as a society despite being the wealthiest country in the world.”
You keep saying that. Provide some data to support your position.
“I mean under your Draconian ideal, we would never have eradicated small pox.”
Only because of your misunderstanding. Widespread vaccinations are a General Welfare — even those who are not inoculated get a benefit from reduced exposure to the disease, just as those who do not have a CCW license or a gun are safer because of those who do. However, you have yet to show that a single-payer system would be such a boon to the General Welfare of the United States. In fact, the V.A. system is just such a single payer system. How’s that working?
You assume that ALL economic progress in the last century has been the result of socialism. If that were the case, the Soviet Union, China, VietNam, and North Korea would have the highest standards of living in the world. Instead, we do.
“[We] could eliminate the income tax code and small employers wouldn’t necessarily up the benefits they provide their employers (sic).”
I will assume you meant “employees.” Well, why would they not? If the profit margins go up instead, the competitive market will induce some companies to lower their prices to get a larger market share, hence greater net profit. (Lower margins, but more sales.) Thus, the employees, as consumers, get an indirect benefit in lower prices. Or, to entice better workers, companies can raise salaries. The company that gets the better employees will get still higher profits, and win again. Basic Economics.
Don, being intentionally obtuse really doesn’t get you anywhere (tho’ it puts you in the company of others, here). I’m a lawyer. You have the right to legal representation if you’re arrested and can’t afford a lawyer. Guess what – you don’t have any right to *my* labor. Are you truly incapable of conceiving of the process by which that right is secured?
And slavery? Really? Don’t be stupid.
There are several differences, MB:
(1) In a legal proceeding to which one is entitled to a public defender, the state has a paid lawyer prosecuting, so the state is required to pay for a public defender. The state does not afflict us with diseases and maladies the way it afflicts us with lawyers.
(2) “Guess what – you don’t have any right to *my* labor.” Exactly. Public defenders choose that line of work, just as some doctors choose to work in public health clinics. One cannot simply go to any lawyer and demand representation without paying. If fact, even if you can pay, he can refuse to represent you. Private lawyers are not forced to serve as public defenders. Hospitals, even private ones, are are forced to provide services without compensation. The difference is choice vs. force.
(3) Even with the availability of public defenders, many people choose private representation. Under the Clinton health-care plan, and under the single-payer systems of many countries, paying a private doctor for service is illegal.
MB – Are you, or any other lawyer, compelled, as a condition of practicing your craft, to provide wills and trusts to the indigent? Real estate transactions? My rights to a public defender(if i were indigent) are more on a par with providing obstetric services to indigents, but nothing else.
What is being proposed is to take control of all health care, and allow no alternative employer but government for health care providers.
No one has proposed a total takeover of your profession by government nor has anyone proposed that you work for whatever “the people” want to pay you, regardless of the true market value of your services.
The day that Universal Health Care passes Congress, I will make preparations for another profession. I had thought about cabinet making, but perhaps I will instead read for the Bar. I don’t see your profession being nationalized any time soon.