Official Brief Comparison of House/Senate HC plans

[samclem]

The pdf file at this link was posted at Speaker Pelosi's site. It contains an 11 page synopsis of the differences between the two bills. Of course, the problems, challenges, and underlying rationale for the differences in the two pieces of proposed legislation are not provided, and the earmarks and sweetheart deals are not mentioned.

Apologies if this was posted before, I wasn't reading everything over the holidays.

[FinanceDude]

Quote:

Originally Posted by samclem The pdf file at this link was posted at Speaker Pelosi's site. It contains an 11 page synopsis of the differences between the two bills. Of course, the problems, challenges, and underlying rationale for the differences in the two pieces of proposed legislation are not provided, and the earmarks and sweetheart deals are not mentioned.

At least she posted something....... I wonder if Nebraska is really going to be allowed to let the other 49 states pay their share of Medicare.....

[ziggy29]

At this point, at the very least I hope those bribes earmarks to buy votes from reluctant Senators are stripped out of whatever reaches the president's desk. And this time they will only need 50 votes, not 60, in the Senate.

[FUEGO]

Good to see features/numbers on paper in this type of comparison. And assuming this bill passes, this should be the rough range of features, benefits, costs etc.

Just taking a quick look at the maximum premiums, these act as a roughly 18% effective marginal tax. In other words, earning an extra dollar will decrease your health insurance credit by 18 cents. That's just from plugging in a few incomes and credit amounts on the Senate plan. If I were using this for health insurance (instead of employer provided) and were self employed, my marginal tax rate would be roughly 55%. 48% at a W-2 job. Interesting financial ramifications and set of incentives. I'll leave it at that to avoid any political commentary.

[ziggy29]

Quote:

Originally Posted by FUEGO Just taking a quick look at the maximum premiums, these act as a roughly 18% effective marginal tax. In other words, earning an extra dollar will decrease your health insurance credit by 18 cents. That's just from plugging in a few incomes and credit amounts on the Senate plan. If I were using this for health insurance (instead of employer provided) and were self employed, my marginal tax rate would be roughly 55%. 48% at a W-2 job.

Suffice it to say that retiring early in 2013 with no debt and a sustainable ~$40,000ish household income just got a lot more attractive if this passes. That's enough to live on with no debt, a paid off house and very highly subsidized health care, and any dollar I make from w*rk after that would effectively leave less than 50 cents in my pocket.

[FUEGO]

Quote:

Originally Posted by ziggy29 Suffice it to say that retiring early in 2013 with no debt and a sustainable ~$40,000ish household income just got a lot more attractive if this passes. That's enough to live on with no debt, a paid off house and very highly subsidized health care, and any dollar I make from w*rk after that would effectively leave less than 50 cents in my pocket.

Yep. And maybe get a little side hussle going to bring in some untaxed* extra money. Ebay sales, auto repair, lawn care, child care, etc.

Increasing the marginal effective tax rate will serve to incentivize the grey/black market for labor.

Edited to add:
Roughly $40000-45000-ish per year was what I was planning on to ER, along w/ a paid off house. Plus $12000 a year of health insurance. But now it looks like it will be closer to $2000-3000 for health insurance. That $9000/yr savings is worth $225k-300k.

With clever tax loss harvesting, I could probably pull a bit more than $45000 a year out, since part of the "withdrawal" would be the sale of assets with some cost basis that would not be taxable.

* see tagline, and your accountant

[samclem]

Right. But all we can do now is static analysis, which is unlikely to tell us much. We'll see the story unfold as people, not being dumb, react to the "incentives" in the plan. For example, as Fuego and Ziggy observe, lots of folks will "drop out" of the work force or take active steps to reduce their income in order to qualify for more government subsidies (i.e. money from the declining pool of remaining taxpayers). Which drives government costs up (more assistance payments to the "poor") and government revenues down (fewer folks paying taxes, and at lower rates).

I think the final picture will be ugly.

Somebody needs to demand that the CBO do a 20 year projection of costs (to overcome the present shenanigans of taxing for 3 years before providing benefits, thus making the 10 year balance look "good") and then publicize it in a way that allows taxpayers to see what the bill will be to them. An added govt deficit of $10 trillion means nothing to Joe Sixpack, but "added taxes to you of $4K per year plus the cost of your insurance premiums" would grab the needed attention. But that's the problem with our tax system--the complexity makes it difficult for people to know how much they'd have to pay for each buck of spending. Almost like it was designed to do that . . .

[ziggy29]

Quote:

Originally Posted by samclem Right. But all we can do now is static analysis, which is unlikely to tell us much. We'll see the story unfold as people, not being dumb, react to the "incentives" in the plan. For example, as Fuego and Ziggy observe, lots of folks will "drop out" of the work force or take active steps to reduce their income in order to qualify for more government subsidies (i.e. money from the declining pool of remaining taxpayers). Which drives government costs up (more assistance payments to the "poor") and government revenues down (fewer folks paying taxes, and at lower rates).

Though I would point to at least *one* silver lining in this cloud -- people voluntarily retiring create job openings for people currently looking for w*rk and collecting unemployment benefits and perhaps other subsidies as well. So at least some of the potential mess might be offset by reduced outlays in unemployment and other public benefits paid to the unemployed, underemployed and low-income households. I don't think that would offset the losses caused by many 40-something and 50-something higher-earning taxpayers suddenly finding retirement feasible and a lot more financially attractive, though.

[Texas Proud]

Quote:

Originally Posted by ziggy29 At this point, at the very least I hope those bribes earmarks to buy votes from reluctant Senators are stripped out of whatever reaches the president's desk. And this time they will only need 50 votes, not 60, in the Senate.

Are you sure The way everyone talks, including the politicians is they still need the 60.... I think they can filibuster it when it comes back...

[samclem]

A substantive meeting took place between President Obama and House and Senate leaders. Here's AP's report. Some excerpts:

Quote:

The White House was put on the defensive Wednesday after President Barack Obama pushed congressional leaders to fast-track health care legislation behind closed doors despite his campaign promises of an open process. . . . The decision was made in an Oval Office meeting Tuesday evening with House Speaker Nancy Pelosi and House Majority Leader Steny Hoyer. Senate Majority Leader Harry Reid and his No. 2, Sen. Dick Durbin, D-Ill., joined in by phone. They agreed that rather than setting up a formal conference committee to resolve differences between health bills passed last year by the House and Senate, the House will work off the Senate's version, amend it and send it back to the Senate for final passage, according to a House leadership aide, speaking on condition of anonymity in order to discuss the private meeting.

I'm fairly sure that AP has their facts wrong, and that the deliberations will be open to the public. The President feels very strongly about this openness, it was a major part of his campaign. During his campaign he explained the importance of open deliberations, covered on C-SPAN, regarding the crafting of the health care legislation. It hasn't happened in the House or Senate, so I assume the president was probably referring to the conference committee process. Anyway, his passion and sincerity come through loud and clear in the videos.

Again from AP:

Quote:

The House wants to raise income taxes on individuals making more than $500,000 and couples over $1 million. The Senate would slap a new tax on high-cost insurance plans. Although the Obama administration supports the Senate's insurance tax as a cost-saver, labor unions, which contribute heavily to Democratic candidates, oppose it. . . . There also could be common ground on a Senate proposal to raise Medicare payroll taxes. In place of a new government insurance plan House Democrats plan to insist on stronger affordability measures for the middle and lower classes, and they also favor revoking insurers' antitrust exemption. Obama agreed at Tuesday evening's meeting to help strengthen affordability measures beyond what's in the Senate bill, the aide said.

Those "affordability measures" surely refer to transfer payments from some Americans to other Americans. The present Senate and House plans have taxpayers providing subsidies for people with incomes up to 400% of the poverty level ($43,320 for an individual, $88,200 for a family of four in 2009).

It also bears repeating that a lot of those "individuals earning over $500,000" are small business owners who simply file the tax returns for their unincorporated businesses as individual tax returns. Higher taxes will reduce the amount available for employee pay in these small businesses.

[ERD50]

Quote:

Originally Posted by samclem .... to overcome the present shenanigans of taxing for 3 years before providing benefits, thus making the 10 year balance look "good"). . .

Just a data point on this - I was a dinner party recently, and as the 'menfolk' gathered to solve the world's problems (sans cigars & brandy these days), I brought this up. Of the three other guys, one was fully aware of these shenanigans, the other two were surprised, and seemed a bit upset by it.

But these guys work for a living, they don't have as much time as I do to follow this stuff. But they probably represent the average voter better also.

-ERD50

[samclem]

Quote:

Originally Posted by Texas Proud Are you sure The way everyone talks, including the politicians is they still need the 60.... I think they can filibuster it when it comes back...

Yes, they can. A conference report (the bill that will result from House/Senate negotiations) can be fillibustered once it returns to the Senate. At that point, it would require 60 votes to invoke cloture and end the fillibuster. So, 60 votes still needed (as far as I know).

[ERD50]

This was apparently more transparency than they could handle. I had it, but when I came back and hit refresh:

http://www.speaker.gov/pdf/HScomparison.pdf

Quote:

Site Error An error was encountered while publishing this resource. Resource not found Sorry, the requested resource does not exist. Check the URL and try again. Resource: http://www.speaker.gov/pdf/HScomparison.pdf

I did a google search, does not seem that it was just moved - it's gone!

-ERD50

[Gone4Good]

Quote:

Originally Posted by ziggy29 Suffice it to say that retiring early in 2013 with no debt and a sustainable ~$40,000ish household income just got a lot more attractive if this passes. That's enough to live on with no debt, a paid off house and very highly subsidized health care, and any dollar I make from w*rk after that would effectively leave less than 50 cents in my pocket.

Strange how on an early retirement forum where w*rk is considered a 4 letter word this isn't seen as an unequivocally good thing.

[ziggy29]

Quote:

Originally Posted by . . . Yrs to Go Strange how on an early retirement forum where w*rk is considered a 4 letter word this isn't seen as an unequivocally good thing.

Because I think it's unsustainable and, if enough people catch on to it, I think it could be economically ruinous. Some things are more important than our own self-interest.

I want to retire early, but only if both my own finances and the nation's finances are set up to be long-term sustainable. And I'm not willing to make the generations after me a step removed from being indentured servants for my benefit.

[samclem]

Quote:

Originally Posted by ERD50 Just a data point on this - I was a dinner party recently, and as the 'menfolk' gathered to solve the world's problems (sans cigars & brandy these days), I brought this up. Of the three other guys, one was fully aware of these shenanigans, the other two were surprised, and seemed a bit upset by it.

I had a similar discussion with my FIL over the holidays. He had found out about this only very recently, and was really disgusted by it.

There's just so much "stuff" going on right now, such an artificial air of "too urgent to allow full deliberation and discussion, and so much opaqueness and obfuscation that I think it is just not practical for folks to be aware of the highjinks on every front.

[dgoldenz]

How come nobody ever talks about the wonderful results of states that have already implemented "reform"? I'm looking at you Massachusetts, New York, New Jersey, Maine, New Hampshire, Washington, Kentucky (already repealed). What do all of these states have in common? I'll give you one guess.

[Gone4Good]

Quote:

Originally Posted by dgoldenz How come nobody ever talks about the wonderful results of states that have already implemented "reform"? I'm looking at you Massachusetts, New York, New Jersey, Maine, New Hampshire, Washington, Kentucky (already repealed). What do all of these states have in common? I'll give you one guess.

Insurance that can't be denied if you're sick?

Insurance that can't be dropped if you become sick?

Am I close?



You might reconsider the value of "low cost" insurance in other states against the risk of having that insurance "rescinded" once you file a large claim. Often times you get what you pay for.

[samclem]

Quote:

Originally Posted by dgoldenz How come nobody ever talks about the wonderful results of states that have already implemented "reform"? I'm looking at you Massachusetts, New York, New Jersey, Maine, New Hampshire, Washington, Kentucky (already repealed).

There are lessons to be learned from the state experiments, but I agree with those who caution that in many ways they aren't applicable to a national system.
A few examples:
-- If a state institutes a big taxpayer-funded medical giveaway program, businesses will emigrate and sick people will immigrate. There are very low barriers to interstate movement for people or businesses. While the same thing will happen on a national level, the scale will likely be smaller (though I think some businesses will relocate).
-- Some of the cost savings from a national system were supposed to come from standardization and economies of scale. These are harder or to achieve at a state level.
-- Any state system would be an "add-on" to the existing (partially) federally-funded Medicaid and Medicare systems. They have to abide by the arcane rules of those systems. Many hoped a federal system would better coordinate the care provided through various funding sources. States will always be dragged around/responding to the federal 900 lb gorilla's movements.

Yes, the big problems in the state reform efforts should be a flashing warning sign, but we'll have to be careful in taking lessons from them.

[Gone4Good]

Peggy Noonan, who is always enjoyable to read and usually very thoughtful, had this fairly unthoughtful thing to say about reform . . . .

Quote:

The public in 2009 would have been happy to see a simple bill that mandated insurance companies offer coverage without respect to previous medical conditions. The administration could have had that—and the victory of it—last winter. Instead, they were greedy for glory.

So if you were to pass Noonan's "simple bill that mandated insurance coverage without respect to previous medical conditions." You'd also have to mandate that individuals buy insurance to avoid adverse selection problems. And if you have an individual mandate then you have to either exempt people who can't afford insurance from the mandate or give them subsidies.

Which kind of sounds like the bill we got.