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McCain's proposed health insurance tax increase
Old 07-31-2008, 11:53 AM   #1
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McCain's proposed health insurance tax increase

He proposes doing away with the "exclusion from income taxes of health benefits paid by employers." Only you can figure out how much extra taxes you'll pay.
http://www.nytimes.com/2008/07/09/us...l?pagewanted=2

I, as an ER, do not have employer sponsored health care and would welcome McCain's proposed $2500 credit for health insurance premiums. (But I still won't vote for him.)

(Moderators: I thought this might be the right forum as it is about money, taxes, etc. But please move to Soapbox if you feel that's more appropriate. )
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Old 07-31-2008, 12:04 PM   #2
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I appreciate the *intention* behind this -- to create a more vigorous and competitive individual insurance market and to sever the link between employment and health care -- but I'm skeptical that it would work.

And then there is the cost. I don't know how much of a tax break my employer gets for providing health insurance for my wife and me, but I'm pretty sure it's quite a bit less than $5,000. My benefits statement for 2008 said my employer is paying about $7500 a year for our health insurance, and if they got a $7500 tax break on a 35% corporate income tax, my calculation indicates that the Treasury will be giving a $5,000 credit instead of a tax break valued at $2,625 to my employer. That would seem to be a budget buster to me.
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Old 07-31-2008, 12:14 PM   #3
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I like the intent. We'll see how the math works out.

It looks like employers could still deduct your health insurance as an expense, it just would be after tax comp, hence fully taxable to you and still subject to payroll taxes for your employer. But as a deduction, it would not require your employer to start paying income tax on it at the corporate level, right?
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Old 07-31-2008, 12:45 PM   #4
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I will not have health care from my current employer when I retire, but will get Tri_Care due to AF Reserve retirement. I agree, that severing the tie between employment and healthcare would be a good thing. I've seen several relatives scramble to find health care due to loss of a job, or because an employer unilaterally discontinued retiree healthcare.
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Old 07-31-2008, 01:22 PM   #5
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Driving everyone into the individual health insurance market is McCain's plan, and his assumption is that insurance companies would need to be more "competitive" to get more business. Frankly, they are already making a whole lot of money from people like me. I don't think they would need to make any generous concessions to get more customers. They would be sitting in the catbird seat. Everyone else, driven out of employer sponsored health insurance, would be the mice.
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Old 07-31-2008, 01:57 PM   #6
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Originally Posted by Oldbabe View Post
He proposes doing away with the "exclusion from income taxes of health benefits paid by employers." Only you can figure out how much extra taxes you'll pay.
If you are concerned about tax increases, you may be voting for the wrong guy.
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Old 07-31-2008, 02:21 PM   #7
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If you are concerned about tax increases, you may be voting for the wrong guy.
My intention was to point out that even though McCain is promising not to raise taxes, he IS indeed planning to raise taxes on employer sponsored health insurance. I'll bet there are other areas too, if you dig into his platform.
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Old 07-31-2008, 03:23 PM   #8
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I'd love to have health insurance independent of employment. You wouldn't have your insurance changed every year by your employer. And I wouldn't have to worry about picking up individual coverage when my DW decides to retire. Moving the deductibility sounded like a good way to do it.
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Old 07-31-2008, 03:33 PM   #9
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I'd love to have health insurance independent of employment. You wouldn't have your insurance changed every year by your employer. And I wouldn't have to worry about picking up individual coverage when my DW decides to retire. Moving the deductibility sounded like a good way to do it.
What makes you think that your coverage would remain stable just because it's independent of your employer? As an individual you have very little bargaining power with the insurance company. My insurance company raised my rates 24% this year. Also, if you moved to another state you still might have to change insurance and undergo underwriting.
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Old 07-31-2008, 03:44 PM   #10
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Quote:
Originally Posted by Oldbabe View Post
What makes you think that your coverage would remain stable just because it's independent of your employer? As an individual you have very little bargaining power with the insurance company. My insurance company raised my rates 24% this year. Also, if you moved to another state you still might have to change insurance and undergo underwriting.
I don't think this is going to be the great solution to the problem we have with health insurance.

I read an article many years ago that I still think is the best alternative to employer-based health care. The author pointed out that very few people stay with one company very long any more. However, organizations and non-profits (NRA, Greenpeace, Sierra Club, PETA, etc) tend to keep members for a long time. He suggested moving the tax breaks to the orgs and away from the employers. I don't see a big problem with it. If you are a liberal and you get mugged and become a conservative you can change your membership from Amnesty International to The Cato Institute, but otherwise you'll probably stay affiliated for most of your life.
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McCain Health plan
Old 07-31-2008, 04:15 PM   #11
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McCain Health plan

What about pre-existing conditions? Does his plan make sure that Ins. cos don't denial coverage or charge $2000 a month or more for limited coverages?
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Old 07-31-2008, 04:29 PM   #12
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This plan sounds like car or homeowners' insurance--file a claim, rates go up or you get dropped.... IMHO, lets take employers, insurance, and other middlemen out of the medical field, require us to prepay directly to health care providers via taxes or otherwise (because if it's not a requirement not everyone would do it), and drop the preexisting condition nonsense. I don't often go to the doctor but when I do I feel like I'm wasting the staff's time with the insurance hoops they have to jump through (and that adds to the cost of health care, none of which goes back to the health care providers). Why I oughta....
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Old 07-31-2008, 04:30 PM   #13
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Since Hillary is gone. This locked up my vote to McCain. I love where he is going with health care.
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Old 07-31-2008, 04:34 PM   #14
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Originally Posted by Oldbabe View Post
What makes you think that your coverage would remain stable just because it's independent of your employer? As an individual you have very little bargaining power with the insurance company. My insurance company raised my rates 24% this year. Also, if you moved to another state you still might have to change insurance and undergo underwriting.
At least I'd have control of the process. I have changed doctors once or twice just to stay within the new network provided by my employer's plan. Who knows where all my medical records are?

My main concern now is having to transition from employer to individual insurance at 50-something years old, hoping I won't get burned by some pre-existing condition(s) that will raise the cost sky-high or make it difficult to get insurance at all. Each yearly physical seems to find more problems.

If I had bought insurance straight out of college I could have kept it through about 6 employer changes and retirement. Or changed for a lower cost or different coverage if I was still insurable.

I'm not in this boat, but what happens if you get a disabling long-term health problem, have to quit work, and you're only 45 years old? Seems like COBRA would only last 18 months and you wouldn't have any insurance any more. I'd much rather have my own insurance coverage, but not bad enough to buy my own when the DW's employer is heavily subsidizing the cost of their plan.
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Old 07-31-2008, 06:23 PM   #15
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People in their 40's or 50's, with potential pre-existing conditions, who have to quit work or just want to retire early are in deep trouble in this country right now. Some states have high-risk pools that you can buy into, but you'd better have an extra $1000+/month income that you can draw on for the premiums.
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Old 07-31-2008, 06:50 PM   #16
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The info on McCain's web site acknowledges the problem some people have in obtaining health insurance, and provides some non-specific ideas on how the problem might be addressed

Here's the portion that addresses it:
Quote:
As President, John McCain will work with governors to develop a best practice model that states can follow - a Guaranteed Access Plan or GAP - that would reflect the best experience of the states to ensure these patients [high-risk patients] have access to health coverage. One approach would establish a nonprofit corporation that would contract with insurers to cover patients who have been denied insurance and could join with other state plans to enlarge pools and lower overhead costs. There would be reasonable limits on premiums, and assistance would be available for Americans below a certain income level.
This state-centric, means-tested solution won't be an appealing answer for those seeking a "simple" solution (i.e. a wholesale government takeover of the medical care system in the US).

Breaking the employer-health care link is a great first step regardless of where we eventually end up. It will free up millions of people to seek jobs that better suit their talents and their desires.
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current market shares
Old 07-31-2008, 07:37 PM   #17
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current market shares

For some perspective, I looked up the percentage of the population currently buying individual coverage - it's only about 9%.

In effect, McCain proposes to take the least-used form of health insurance coverage and move it to #1.

I think I'll need a few more details before I can agree...



Income, Poverty, and Health Insurance Coverage in the United States: 2006. U.S. Census Bureau., August 2007. http://www.census.gov/prod/2007pubs/p60-233.pdf
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Old 07-31-2008, 10:48 PM   #18
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I read an article many years ago that I still think is the best alternative to employer-based health care. The author pointed out that very few people stay with one company very long any more. However, organizations and non-profits (NRA, Greenpeace, Sierra Club, PETA, etc) tend to keep members for a long time. He suggested moving the tax breaks to the orgs and away from the employers. I don't see a big problem with it. If you are a liberal and you get mugged and become a conservative you can change your membership from Amnesty International to The Cato Institute, but otherwise you'll probably stay affiliated for most of your life.
Now that's a great idea IMHO - if the country could find a way to make the transition - perhaps McCain's idea on this would help then.

Didn't this employer based system really start with Unions anyway? I currently get my fed employee FEHB plan from NALC (National Assoc of Letter Carriers - & I'm not a letter carrier, or even a postal employee)

Perhaps even the political parties could have a group health plan for registered, dues paying, members? Fee-For-Service for the Repubs & HMO's for the Dems? Herbal medicine plans for the Greens? I don't know about the Libertarians though?
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Old 08-01-2008, 07:02 AM   #19
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Originally Posted by headingout View Post
People in their 40's or 50's, with potential pre-existing conditions, who have to quit work or just want to retire early are in deep trouble in this country right now. Some states have high-risk pools that you can buy into, but you'd better have an extra $1000+/month income that you can draw on for the premiums.
This is the biggest issue with our system and causes a lot of damage to the economy. People with pre-existing conditions cannot leave their jobs to be entrepreneurs - at the peak of their occupational life. And as every politician will tell you, small businesses are the engine of the economy.
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Old 08-01-2008, 10:21 AM   #20
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Didn't this employer based system really start with Unions anyway?
I can't provide a reference, but I have this recollection of having read that the employer-based system started during World War II. The problem was that wage controls were in force during the war. Businesses were having trouble holding on to talent - which was in short supply since they were all overseas - because they couldn't increase wages. Health insurance was a perk that wasn't covered by wage controls. At least that's my recollection.
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