Bush's Health Plan--merged threads

[mykidslovedogs]

Originally Posted by Helena

What changes is that the health insurance premiums that they pay on your behalf becomes taxable income to you just like any other form of wages...

But then you get the standard DEDUCTION of $15000 for family or $7500 for individual, so you would only pay taxes on the cost of coverage exceeding $15000 or $7500. What is different is before it was a PRE-TAX deduction, and after it would be a POST-TAX deduction.

quote from the interview:

"Now, what about people getting insurance through their jobs right now? Anybody getting a policy under the standard deduction, a family policy of less than $15,000, or an individual policy of less than $7,500 would immediately see a lower tax bill. That's because they would get a standard $15,000 deduction for a family, but then they would have to count as taxable income their insurance policy, but it would be lower than the $15,000, so their tax bill would go down."


Martha: The information in the interview was very vague about the programs that are going to be proposed to allow more funding for state risk pools, etc. I say we listen carefully to what is proposed to see if it makes sense. I like the idea of the standard deduction. I think it is better than a liberal approach, because, IMO, the majority of people will take a more active role in understanding the cost of their coverage and have the opportunity to weigh the cost vs. benefit of going with a "rich" plan design (copay plan) vs. a more catastrophic plan design (HSA). The liberal approaches will still shelter the customer from the cost of their care. I can also see this being a very good incentive to bring more of the "young and invincibles" (uninsured 19-34 yr olds) into the pool, and they account for a very large chunk of the uninsured market.

[Helena]

Most see the carrot... but I see the stick !





What Bush's health plan means to you

Under President Bush's proposal most people will see a tax break - at first.
But workers covered by their employers may ultimately see a tax hike.

**

Initially, only 20 percent of those who are covered through work will see a tax increase, according to White House estimates. But that number will go up over time, because while the deduction cap would be indexed to inflation, health care costs rise much more quickly. Hence, your plan costs could exceed the deduction cap within a few years of the cap's implementation, depending on your circumstance.

Ten years after the proposal is in effect, 40 percent of plans will exceed the standard deduction, according to a preliminary analysis of the proposal by the Tax Policy Center.

http://money.cnn.com/2007/01/23/pf/t...ion=2007012321

[Helena]

Originally Posted by Helena

So let me put it another way, your taxable income, if this policy is implemented, will be your wages and anything your employer is paying for health insurance. You're already paying your share out of your wages, so your total taxable income is the check that you get, plus whatever your employer has paid directly to the health insurance company.

**

What changes is that the health insurance premiums that they pay on your behalf becomes taxable income to you just like any other form of wages...


http://www.whitehouse.gov/news/relea...0070122-7.html

I still want to know how
they are going to handle
retirees who get all or
a part of their health ins
premiums paid by their
former employers as
part of their pension
package.

Will these retirees now be
considered "employees" again
receiving "wages" ??

[Tadpole]

Originally Posted by Helena

Most see the carrot... but I see the stick !





What Bush's health plan means to you

Under President Bush's proposal most people will see a tax break - at first.
But workers covered by their employers may ultimately see a tax hike.

**

Initially, only 20 percent of those who are covered through work will see a tax increase, according to White House estimates. But that number will go up over time, because while the deduction cap would be indexed to inflation, health care costs rise much more quickly. Hence, your plan costs could exceed the deduction cap within a few years of the cap's implementation, depending on your circumstance.

Ten years after the proposal is in effect, 40 percent of plans will exceed the standard deduction, according to a preliminary analysis of the proposal by the Tax Policy Center.

http://money.cnn.com/2007/01/23/pf/t...ion=2007012321

As I pointed out - This is a health care AMT in the making. I would oppose such a proposal on that basis alone. How long does it take for lower cost employer insurance plans to reach the limits when the difference between the CPI and increases in insurance is 7% or more? Costs of health are not addressed and those costs are high for higher risk (sicker) people and people with sicker children. Until the US costs come in line with the costs in comparable nations, the public should reject any slights of hand that do not address the root causes. The issue is providing affordable health care to the people not reducing one person's health care access to fund a health-care tax EITC for another. If this were passed and less costs for uninsured health care were shifted to those who are insured, would insurer lower the costs of thier policies or pocket the difference and continue to raise their rates under the excuse of health-care increases?

[teejayevans]

The whole point is that the poor currently get free medical care, or at
least emergency care, hospitals don't turn away someone for lack of
medical insurance, whether they give 100% is another matter.
The hospitals pass this along to those that can pay, hence the insured
are paying the medical bills of the uninsured anyway. If everybody
was covered, in theory your costs would go down (yea, me thinks the
hospitals will not pass on their savings).
We need:

A new business tax that is strictly based on the number of employees you
have, with no deductions, no exemptions, every business pays its fair
share.(Business won't like cause they don't want to pay for it, but do want
to pocket the expenses they now pay, so more of the executives can get
their 210 million dollar severance packages.

Free basic medical care that covers 99% of the medical procedures (unproven,
hi risk, or experimental procedures aren't covered. (Insurance companys won't
like cause they make good money of the high insurance rates, shhh they don't
want you to know that...). Of course their still be insurance to cover what the
Fed doesn't, just like those on medicare have supplemental insurance. The
free medical care wouldn't be exactly free, got have some reasonable deductable
to prevent abuse.

New tort law; a man can live with a couple of leaches attached to him,
but not thousands...Lawyers (and 80% of congress are ex lawyers)
won't like that either. If Edwards got elected President, you can expect
a huge jump in medical costs just for the increase in lawsuits, cause
any reforms would be ambulance chaser friendly.

fyi:
In countries with free health care, the rich still pay for premium for the
best health care, ie the best doctors can charge more for what the govt
will reimburse.

[laurence]

Listened to the Nuremburg rally last night (oops, hope I didn't just invoke Godwin's law), and the point that stood out to me was the tax deduction proposed for individuals without health insurance to buy their own plan. Obviously, this could have a big impact on those of us who want to retire early - before Medicare kicks in. I do here that this may cause a death spiral, as healthy people opt out of employee plans since they can end up saving more money shopping on the open market + tax deduction. Then only those who can't qualify for health insurance would stay in the employer pool. Rates would rise, more would opt out, etc. Thoughts?

[lets-retire]

Something I have not seen addressed is when the insurnace is provided for the employee, but the employee has to pay to add the family. Where does the deduction fall?

[Martha]

Originally Posted by Helena

I still want to know how
they are going to handle
retirees who get all or
a part of their health ins
premiums paid by their
former employers as
part of their pension
package.

Will these retirees now be
considered "employees" again
receiving "wages" ??

Helena, based on what I have heard, the answer to your question is yes.

Don't get too wound up about it yet. It is just a proposal, and there are competing proposals out there.

[Martha]

Well we now have three threads talking about Bush's plan. Laurence, I thought of this issue as well. I worry about adverse selection issues. Young and healthy go by a cheap individual plan and older less healthy workers are left with the group plan through their job. Do to adverse selection, the rates for the group plans increase.



I merged all three threads that were addressing Bush's plan.

[mykidslovedogs]

Originally Posted by Martha

Well we now have three threads talking about Bush's plan. Laurence, I thought of this issue as well. I worry about adverse selection issues. Young and healthy go by a cheap individual plan and older less healthy workers are left with the group plan through their job. Do to adverse selection, the rates for the group plans increase.
I merged all three threads that were addressing Bush's plan.

I am always one to worry about adverse selection too, but the reason I don't think it will be too much of an issue here is because the employer still wants to offer a BENEFIT in order to retain good employees, so the employer will still pick up most of the cost of the premium for the employee, making it a better deal for the employee to stay on the group plan and take advantage the tax refund for opting into a more catastrophic plan design (say an HSA). (Don't forget, the EMPLOYEE gets the tax deduction regardless of who pays the premium on the policy).

IMO, this concept may help reduce some of the burden of the cost of health insurance for employers, because employees will opt into less expensive plans so they can get a bigger tax refund at the end of the year. A side effect could be a decrease in unemployment because employers will have more $$ to invest in their business as they will likely end up spending less on their benefit plans.

[Nords]

Originally Posted by rodmail

The prez is putting at least SOMETHING on the table. Hard to say that's bad.

Originally Posted by Laurence

Listened to the Nuremburg rally last night

I think the speech (and all his future speeches) would be much more effective using this prepared text:

"Quack, quack. Thank you everybody, good night!!"

[Caroline]

I've read all comments here and all I can add is this -- if the excellent minds on this Forum cannot figure it out in 5 pages of discussion...

...then I'm against it on the grounds that anything this unclear must necessarily include something they're trying to sneak by us.

[Beststash]

I'm against it at first glance. I think the idea that we can solve all of our problems with a tax cut is the same old mantra that got us in this situation in the last 5 years (double digit healthcare increases every year). No matter how much the sheeple would like to play like we get more revenue by cutting taxes - it is simply not true. The difference is not made up and it just further increases the deficit. The answer to everything is not a tax cut or a tax break for business. If we want a world-class healthcare system in this country we need to go toward a version of single-payer plan. Healthcare is not something that should generate profit by those that would like to create a bidness opportunity for everything that happens in this country.
We are no longer #1 in many things anymore and it is not a secret that since 1980 we have been in the control of those that would like to push our problems on the next generation.
How about some real bi-partisan leadership on this issue that focuses on the working people of this country and not the business interests.

Peace

[modlair]

I think the speech (and all his future speeches) would be much more effective using this prepared text:

"Quack, quack. Thank you everybody, good night!!"

There is a lot to be said for this perspective, in a very big picture way. Presidents in their last few years are usually overshadowed by the upcoming campaign. What struck me last night was just how utterly typical it all was. Bush will remain President for the rest of his term. The far left that wanted him impeached will get nothing and probably punish those who did nothing in the primaries. The right wing will maneuver to influence things and ensure no liberal programs of any significance go into place. And that will be that.

But.

The one thing that does come in different from last night . . . from a typical late year SOTU . . . is this health care proposal. It is a definite conversation starter and as such I do not think it can be labeled DOA. The issue is now on the table.

The most important part that I see of this is that the Democrats' preferred National Health Care Agency sits as one preference and a tax cut . . . or at least tax policy based approach sits as the other preference.

What I think the President has just done is put out something that will now be fought over in terms of income or premium thresholds, whether or not it should be a tax deduction or a tax credit (which would help the poor), and flesh out how retirees are handled.

The point is, the discussion won't be how many employees staff the new NHCA building and how much that building costs to build. This entire thread is about the details of the plan and how its specifics will be wrung out. I do believe this will prove true in Congress, too. The President's approach will be debated and attacked and slashed and torn and changed, but in the end it will be the President's approach of tax policy that wins and not a new Federal agency to manage health care in the US.

[farmerEd]

The vast majority of people who do not have health plans, are low income...low income people, especially very low income people already do not pay any taxes...a tax deduction to purchase health insurance does *zippo* to solve this problem.

Universal care is the only solution to the problem even if it creates other problems down the road, and we are moving in that direction very quickly.

Big business is salivating at the idea of jettisoning their health care costs onto the taxpayers...and once you have big business aligned with the left all trying to get the same thing done, its only a matter of time.

[FIRE'd@51]

Just to make things clear. The plan proposed by President Bush (whether you like it or not) is not a tax cut. It is, supposedly, revenue neutral. Taxes on those who are receiving employer-based plans (whether working or retired) whose cost exceeds $7500 (for single) or $15,000 (for families), i.e, the so-called "Cadillac" plans, will increase. Their increased taxes will pay for the tax cut received by those who either have employer-based plans which cost less than $7500/$15,000 or purchase such a plan in the individual insurance market. What this proposal does is make the purchase of insurance more equitable from a tax point-of-view, and I applaud that.

What the plan does not do, as has been pointed out by Martha and others, is address the insurance access problem in a direct way. Those with pre-existing conditions, etc. will still face the same obstacles to buying affordable insurance in the individual insurance market as they face now, unless they live in a state which addresses this problem in meaningful way.

At the margin, a few healthy people (mostly young) with good incomes who currently do not have health insurance may be induced to purchase it with the tax benefit. That is a good thing. However, this proposal is far from a solution to the healthcare problems in the US. Nevertheless, it is good to have this proposal on the table in that it should increase the dialogue on this issue.

[mykidslovedogs]

Originally Posted by FIRE'd@51

Just to make things clear. The plan proposed by President Bush (whether you like it or not) is not a tax cut. It is, supposedly, revenue neutral. Taxes on those who are receiving employer-based plans (whether working or retired) whose cost exceeds $7500 (for single) or $15,000 (for families), i.e, the so-called "Cadillac" plans, will increase. Their increased taxes will pay for the tax cut received by those who either have employer-based plans which cost less than $7500/$15,000 or purchase such a plan in the individual insurance market. What this proposal does is make the purchase of insurance more equitable from a tax point-of-view, and I applaud that.

I sell health insurance in Colorado. Very few plans, even in the group realm, cost more than $15000 for a family. Even a $500 deductible copay plan with a prescription drug card and unlimited office visits at the copay level costs less than that on average. One thing to think about is if a lot of people choose higher deductible plans because of the incentive of the tax deduction, (say a 2000 deductilbe HSA that costs 1/3 to 1/2 the price of the "cadillac" plan), employers will have less to expense from their revenues, so they will either hire more people, invest in capital, or they will pay taxes against their higher revenues. No matter how you look at it, it amounts to tax revenue for the government. Not sure if it will be enough to offset the deductions, but it certainly can't hurt.

To offer a competitive edge for attracting prospective employees, businesses that are able to save a lot in premiums as a result of this legislation might even be willing further encourage enrollment into HSAs by offering to fund a large portion of the HSA plan deductible into an HSA savings account for their employees. A 2000 deductible HSA plan with fully funded HSA account is an even better plan than a 500 deductible copay plan......Just a few items to think about.

Originally Posted by FIRE'd@51

What the plan does not do, as has been pointed out by Martha and others, is address the insurance access problem in a direct way. Those with pre-existing conditions, etc. will still face the same obstacles to buying affordable insurance in the individual insurance market as they face now, unless they live in a state which addresses this problem in meaningful way.

Another thing to think about: Don't forget that those with pre-existing conditions are also going to be able to take the same tax deduction based on this proposal which should greatly help out with the affordability of the higher premiums in the "guaranteed" health insurance market. There is already legislation out there proposing tax credits for the poor to help out in that realm. Take a look at these:

http://www.nahu.org/legislative/HRPs/index.cfm
and
http://www.nahu.org/legislative/uninsured/credits.cfm

[mh]

Originally Posted by Hamlet

I think the general idea for this bill is to start de-linking our health insurance and our employment. They want to limit the tax exempt status of employer-provided healthcare, while at the same time creating a very large personal tax deduction for personal healthcare insurance.

Which seems fairer to me than the current situation even though many reader's
here may not like it (which i can understand). Personally , i think it's awesome
because when i FIRE i'm on my own health plan wise.

This is going to be the case more and more people in the future i suspect.