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 
tx2vadem,
I am going to launch into a rebuttal based upon one single statement. Hopefully I will not ignore all of your points while I do so.
You said:
“On 2, our current system rations health care, it does so by ability-to-pay.”
My understanding is that every system of single payer involves some system of rationing. Would it be wrong that the most healthy get head of the line priveledges? But getting them in and getting them out, we get them to get back to helping us pay for the economy that pays for everyone elses medical care.
Would it be wrong to put a limit on how much money we are willing to give you an additional 10 seconds, 10 minutes or even 10 days to live? How about putting a limit on how much money is spent on YOU if the same amount of money could have benefitted a far larger number of people better if it had been otherwise spent? Is your life paramount or is the greater good paramount?
How about introducing that those most productive are those most worthy of medical care? Should deadbeats receive the same level of care as those who provide fountains of benefits for society?
Just curious if you have given this issue some serious thought beyond “what’s in it for me”.
“Would it be wrong to put a limit on how much money we are willing to give you an additional 10 seconds, 10 minutes or even 10 days to live?”
Should we not ask that of the family and friends? If they are not willing to shell out the money to prolong someone’s life, why should the rest of us?
“How about introducing that those most productive are those most worthy of medical care?”
That is how things are now. People in a capitalist society are generally compensated in proportion to their productivity. Thus, the more productive have better insurance and more money to cover the extras.
“Should deadbeats receive the same level of care as those who provide fountains of benefits for society?”
That is the socialist ideal. To each according to his need, from each according to his laziness.
Little David,
I wasn’t giving any thought to what’s in it for me. I make a good living and I am currently insured in a good plan. Even if my premium goes up, I’ll still be able to pick up the tab. If what’s in it for me was the consideration, given my economic position, age, and current health, I’d say we should do absolutely nothing to change the current system. And it looks to me from your line of questioning, that you are the one more concerned with “what’s in it for me?”
The questions you are asking are philosophical ones. They are based on an assertion that some lives are worth more than others. And if taken to their logical extreme, why not ask why we should not kill the unproductive members or relatively lower producing members or unhealthy members of our society outright because they cost money? A waiter on average makes $18k a year. Agents for Artists, Performers, and Athletes make on average $82k a year. Does this mean agents are more productive? Does this mean they should get faster, better access to health care? Is their job more critical to our economy? Are their lives more important? Should people with non-critical conditions receive faster service because they are healthier than those with critical conditions?
All systems ration because there is not an unlimited supply of anything. Price and profit motive are currently determining the disposition of supply. If you require a treatment for cancer and the insurance company denies your claim, supply has been rationed. The basis for this ration is profit motive at the insurer. Single-payer systems save money by reducing administrative costs; that savings can be used to ensure that the quality of health care is not degraded for anyone. Money is also saved in that there is no need to pay shareholders. And the system itself is no different than a regular insurance system. For regular insurance, you are a part of a risk pool. You may be getting more benefit out of it because you need treatment for whatever reason, while some other premium payer might be paying much more in than they get out because of their health. The more people you have in the pool, the more you can spread the risk, the less the cost of premiums for everyone. As I said earlier, there are other ways to accomplish this. The reason I like single-payer is administrative simplicity.
The Commonwealth Fund also does a lot of surveys of different health care systems. I encourage you to take a look at those.
“How about introducing that those most productive are those most worthy of medical care? Should deadbeats receive the same level of care as those who provide fountains of benefits for society?”
Truly an argument worthy of the twisted logic of Antonin Scalia. Three points:
1. Health insurance is supposed to cover those who are sick. That’s what we’re trying to insure against. In its present form, it’s not really insurance, because it disappears when you become sick, and unable to pay for it. We’re not rationing medical care, as you contend, we are permitting insurance companies to get away with, for lack of a better word, murder.
2. You assume that value to society can be measured in money. Money is certainly A measure of value, but it’s not the ONLY measure of value, and it’s certainly not the BEST measure of value in this context. For proof, just look at your own callous, hackneyed argument, and consider it being applied to your mother, your father, your brother, your sister, your child, or you.
3. Deadbeat? Have you ever heard of the disabled? The poor? The sick? You know, the ones that you’re supposed to visit and comfort? Do you have any idea what the lifetime chances are of you turning into one of these people someday? Every day I meet people who would have agreed with you until the “deadbeat” became them or their loved one. I’m not saying there are no deadbeats, just that their prevalence among the disabled population is vastly overestimated.
Vivian,
We have been in union plants throughout Virginia already showing that this plan would tax your health care. It is not only the employer part of your health care that gets taxed it is your individual part of the premium. An example of this is that if I make $40,000 a year and the company pays $10,000 a year and I contribute $2000.00 a year then my taxable income I would have to claim would be $52,000 a year. that is completely bogus.
Anon, you act like this benefit is because the company is being nice to you. this benefit was won through blood, sweat and tears. The companies that offer it only do it as an enticement to get employees to work for them. My company does not offer this benefit from the kindness of their heart they do so because they are forced to by a written contract. their choice is to either offer it or lose 8,000 talentes skilled tradesmen. Of course I also have the ability to tell the company if you don’t come to an agreement on health care the 8,000 employees will simply walk off the job and go on strike. It is imperative that we find a way to take health care off the negotiating table and it would benefit all parties. the company would have a higher profit margin and the union would be able to concentrate on other things besides being tied down with health care.
Many companies do not offer their employees health care.
Gene – The situation you describe, of being taxed on the money that goes to your health care is already the case for those who are not eligible for an employer sponsored plan. That is the problem. Either everyone should be taxed on that money, or no one.
I prefer no one. (Giving government more money is the same as giving an addict more crack.) That’s why I want to see voluntary association group plan premiums handled as pretax for everyone.
There is just no good reason for some people’s insurance to be pretax while others must pay for it with after tax money.
Gene,
You would not get an ADDED tax for the $2000 you contribute. Currently, that $2000 is pre-tax money. So you are earning $40k, paying $2k for insurance, and so only $38k is taxable.
You would, however, be taxed on the $10k the company pays. This is currently the way things are for life insurance above a certain amount. They call it “imputed income.”
Now, your discussion of the unions’ demanding health insurance is an interesting one. (Of course, many non-union comapanies also offer the benefit.) You are quite correct that companies do not offer health insurance out of kindness. It is economics. They could simply pay you $10k more, and let you go buy your own health insurance. However, as things now stand, that income would be taxable, while your company’s insurance payments are not. Furthermore, individual policies are more expensive, because of the risks. So it is more economical for the company to pay for most of your health insurance.
They could, of course, have you pay 100% of the premium, and pay you a higher salary to compensate. This runs into another problem: people with families tend to be more responsible. If they did that, family-type workers would pay more for insurance. With the company’s paying the bulk of the insurance, single workers essentially subsidize family workers.
Another reason companies don’t do this is that we think we are not paying for the insurance, the company is. It is an illusion. Companies earn a certain amount based on your labor. That income goes to three places — profit, investment, and expenses. Both your salary and your insurance are expenses. The company does not care whether it pays you or the insurance company. But YOU do. If you were paid the money, and then had to turn around and pay for insurance, you would think you were paying for it. But if the company simply reduces what they pay you to pay for the insurance, you think the company is paying for it.
“It is imperative that we find a way to take health care off the negotiating table and it would benefit all parties. the company would have a higher profit margin and the union would be able to concentrate on other things besides being tied down with health care.”
Who’s going to pay for the government health-care program? Taxpayers are. That means you, just as you are now.
Now, if we go to a socialist health-care system like Obama wants, I expect that companies will start offering “supplemental” insurance to cover the rationing that the public system will be forced implement, and people will continue complaining that those with insurance get better care. Of course they do — they’re paying for it. People with money can get better food, too. People with money can buy safer cars. People with money can install alarm systems to protect their families.
This is not necessarily true, Mouse. Not all companies have pre-tax health plans. In fact, most small businesses don’t.
What are the criteria for a company’s health plan to be pre-tax? Why are small companies more likely to have a plan that is not?
The companies have to adopt what is known as a Section 125 plan. There was a time when adopting such plans was relatively inexpensive – that is, of course, no longer the case.
Let me guess — government fees?
Nope. Administrative costs, just like all employee benefit plans. At one point, there were some off-the-shelf, prototype plans available at a relatively low cost but that no longer seems to be the case.
Odd, why would the Section 125 plan policies have so much more admin costs than non-pre-tax policies?
Precisely because they are pre-tax. Any kind of qualified plan has certain rules that have to be met in order to be considered qualified. The administrative costs are associated with those tests to make sure that the rules are being complied with.
If the item uses after tax dollars (aka non-qualified plans), the tests don’t apply.
And so were back to the root cause — government insanity.