The Health Insurers have already won

[ERD50]

Martha, thanks for the summary. Doing some googling, I found this, and I don't have time for much review right now. Do you think this is a decent info source? It looked pretty good at a first glance.

America's Affordable Health Choices Act of 2009 - OpenCongress Wiki

TIA - ERD50

 

[Martha]

Yeah, I like Open Congress, I believe a couple of non-profits run it. The link is to the discussion on the House bill, which is a bear to get through and I haven't tried yet. You can get the bills you might be interested in through that site as well as through official house and senate sites. Official sites, like the finance committee's, are linked to on Open Congress so you can get the pending stuff.

 

[HFWR]

I don't know if I'm a statistical outlier, but I tend to look at what I call the "incremental value of w*rk." Simply put, when working hard and paying taxes doesn't produce enough of a lifestyle boost over working minimally (if at all), paying almost no tax and letting the government subsidize my needs, I'm going to get off the hamster wheel and start consuming tax dollars instead of being a net tax payer. We're not there yet, but the winds seem to be blowing in that direction.

I don't like being that way, but at some point if they continue to do it enough with higher income taxes, more payroll taxes and more means-tested goodies, I'm a schmuck if I keep working. Of course, it helps to have the FIRE mindset (and no debt) to even make this an option. People who spend, spend, spend and have a crushing debt load may not have that option.

While I agree with your sentiment, I think you're overstating the case. Tax rates were much higher in the past, and people still worked. Maybe at the margin it is true. Plus, I think you are over-glamorizing the lifestyle of someone on "welfare"... Granted, if working your butt off has no more reward than the dole, why work? But I don't believe that's true for most people.

 

[ziggy29]

While I agree with your sentiment, I think you're overstating the case. Tax rates were much higher in the past, and people still worked. Maybe at the margin it is true. Plus, I think you are over-glamorizing the lifestyle of someone on "welfare"... Granted, if working your butt off has no more reward than the dole, why work? But I don't believe that's true for most people.

Well, I did say we aren't there yet -- but it seems like we are slowly moving in that direction. The outlook seems to be for higher taxes and an increase in government-subsidized health insurance based on income. So looking at how things are at present, it's overstating... but I'm remarking about what *might* be in the future. The combination of all of these trends would have a considerable impact on reducing the "incremental value of w*rk." Whether and when it is reduced to the point to say "screw it, I quit" remains to be seen. But it's definitely something I keep in mind with my financial planning.

As for the tax rates being much higher in past, that's technically true but very few of the wealthy paid those 50-70% marginal rates because there were so many deductions and loopholes when the rates were that high. These days there's not only far fewer legitimate ways to shield income from taxation, but also the dreaded AMT if you're too successful at finding the few writeoffs remaining.

 

[youbet]

these trends would have a considerable impact on reducing the "incremental value of w*rk."

I tend to agree with you Zig. There seem to be three areas causing the appeal of incremental income (once an "adequate" base is established) to diminish in utility:

1. Expected higher income tax rates, both fed and state.

2. Less availability of deductions and other schemes to avoid taxes.

3. Higher costs (Medicare premiums is one current example) charged as a penality for having a higher income.

As these types of "costs of having income" increase going forward, it will be interesting to note how income earners respond, especially those who have choices regarding how much they work or invest.

If we look at some European countries as examples, we can see that it can and does happen.

One work around for this would be to weight unearned income more than earned income.

 

[ziggy29]

One work around for this would be to weight unearned income more than earned income.

You just lost the senior vote.....

 

[youbet]

You just lost the senior vote.....

I thought they'd all be euthanized by then.........

 

[Independent]

As for the tax rates being much higher in past, that's technically true but very few of the wealthy paid those 50-70% marginal rates because there were so many deductions and loopholes when the rates were that high. These days there's not only far fewer legitimate ways to shield income from taxation, but also the dreaded AMT if you're too successful at finding the few writeoffs remaining.

I'm not sure how you're defining "wealthy". If you mean "people who are living off investment income", then higher tax rates don't cause them to quit working -- they've already quit.

If you mean "people with high earned income", I'm curious about the deductions and loopholes that applied to earned income. I vaguely recall something about being able to offset earned income with losses on "businesses", but I was too young and too poor in those days to care. Do you have a link or some examples?

 

[Martha]

Reid backs health care public option - CNN.com

Reid announces plan to merge the two senate proposals into a bill that will have a public option. What I don't understand at all is the state op-out option. Doesn't make any sense to me but I don't have facts yet.

 

[ziggy29]

What I don't understand at all is the state op-out option. Doesn't make any sense to me but I don't have facts yet.

I don't know how an state opt-out can work. I doubt there's any way to shield that state's residents from paying the federal taxes to fund it, so would an opt out mean none of the benefit and all of the cost?

 

[samclem]

I haven't found a description of this "opt out" thing, except that apparently states would have until 2014 to do the "opting out." Hmmm. Among many of the plans being discussed, there are virtually no health coverage benefits for the first few years, just increased taxes (on individuals and corporations). Is it likely that the residents of a state would like to opt out after paying into the pot for three years? (The funding on some of the plans is very deceptive--collect taxes for the first three years without significant health services. ramp up services over the ensuing years until we're in full give-away mode by year ten. But, because of the initial money collected and the measured ramp-up, the total impact on the deficit over ten years is "only" $800 billion. The "other shoe" is that the next $800 B in additional debt takes only about 3 years to add on. And these are with some very optimistic assumptions about controlling Medicare costs every year--stuff Congress is unwilling to even do right now while everyone is watching them and they are supposed to be showing that they've got the backbone to hold the line.)

The opt-out thing is probably a trial balloon by Reid to see if he can gain support from moderate Democrats. Based on the negative initial response from Nebraska's Ben Nelson, this "opt out" thing might not be successful. Or, the whole thing is just a device to allow Reid et al to say to liberal Democrats "Well, we tried everything, but we can't get the public option. Now, let's pass the 'best' legislation we can get."

It's hard to see how it would work. Residents of the state don't have to pay that part of their income tax? What about corporations?

I thought the "state-run public option" being discussed a few weeks ago had merit: No federal "public option", but if states (alone or in a group) want to go into competition with the private insurers in their states, that should be up to the residents of those states. If there were mandatory purchase requirements nationwide, that would eliminate one of the historic problems with the state-by-state approach.

I have no objections to citizens of other states voting to bankrupt their states. Unlike the federal government, states can't print money, so the fiscal slap in the face and sobering up comes a lot faster at that level.

 

[Texas Proud]

One of the problems with an 'opt out' is no state would ever do it...

There are no benefits in opting out... and if you do, then I am sure the next election will be "Gov so and so gave away all your rights to have afforable health insurance".... doesn't matter if it is true or not...

Like Samclean.... at least a state run plan would likely have to pay for itself (except of course them going to the fed gvmt and asking for handouts)...

And like I have said all along... where are the savings Most of what I see is cost shifting... make the young-uns pay THEIR insurance... that will keep costs down... no, it means your costs are being paid for by someone who is not costing the system anything...


I just thought of a solution for the pre-existing conditions (one of the arguments is the young will not buy insurance until they need it and then get in and cost the system a lot of money)..... make it contingent on you having insurance!! If you have insurance, you can change to another insurer without any pre-existing conditions... but if you CHOOSE not to have any insurance... then any pre-existing conditions do NOT have to be covered when you do enroll... you can make it a 5 year (or whatever) lookback...

 

[eridanus]

One of the problems with an 'opt out' is no state would ever do it...

There are no benefits in opting out... and if you do, then I am sure the next election will be "Gov so and so gave away all your rights to have afforable health insurance".... doesn't matter if it is true or not...

There will be states that'll opt out, at least initially. Texas and Montana come to mind.

As far as taxes, the non-income-tax-but-outrageous-property-tax states get a sales tax deduction on their federal taxes. The same thing could be done for those states that opt out.

 

[DallasGuy]

There will be states that'll opt out, at least initially. Texas and Montana come to mind.

And that's a big problem in my opinion...living in a conservative/red state...you'd get short changed on having the same "opportunities" to buy health insurance.

But I agree with what Texas Proud said...that there would be no advantage to opting out unless you wanted to get voted out during the next election. Texas has the highest percentage of uninsured individuals in the country so I think it would be political suicide to opt out of something that could perhaps provide more affordable health insurance to those that currently can't afford it.

Uninsured: Highest Percentage in Texas, Lowest in Mass.

 

[samclem]

There will be states that'll opt out, at least initially. Texas and Montana come to mind.

As far as taxes, the non-income-tax-but-outrageous-property-tax states get a sales tax deduction on their federal taxes. The same thing could be done for those states that opt out.

What exactly would they be "opting out" of? It doesn't sound like residents of these states get to opt out of any of the mandates (everyone has to have insurance or pay a fine), they don't get to "opt-out" of paying higher prices for products and services due to the higher costs of production being placed on industries nationwide. They don't get to "opt out" of paying higher prices for products due to explicit taxes levied by DC on health care industries. They don't get to "opt out" of buying private health insurance loaded with every mandatory service (from in vitro fertilization to erectile disfunction treatment) that Washington will mandate. Their federal tax money will still flow to the "public option" in states that mosey up to the trough.

I don't think anyone will be fooled by this "opting out" idea.

 

[eridanus]

What exactly would they be "opting out" of? It doesn't sound like residents of these states get to opt out of any of the mandates (everyone has to have insurance or pay a fine), they don't get to "opt-out" of paying higher prices for products and services due to the higher costs of production being placed on industries nationwide. They don't get to "opt out" of paying higher prices for products due to explicit taxes levied by DC on health care industries. They don't get to "opt out" of buying private health insurance loaded with every mandatory service (from in vitro fertilization to erectile disfunction treatment) that Washington will mandate. Their federal tax money will still flow to the "public option" in states that mosey up to the trough.

I don't think anyone will be fooled by this "opting out" idea.

If there's no public option, then states don't have to provide affordable care for anyone with pre-existing conditions. Those people can go to the high-risk high-premium state pool already in place. That sounds like a huge savings. If your non-insured cancer victims have a low lifetime cap, they'll die before running up huge medical costs.

Louisiana is a good example of opting out of federal (highway) funds. It can be done.

 

[eridanus]

Texas has the highest percentage of uninsured individuals in the country so I think it would be political suicide to opt out of something that could perhaps provide more affordable health insurance to those that currently can't afford it.

It's only political suicide if the uninsured vote.

 

[samclem]

If there's no public option, then states don't have to provide affordable care for anyone with pre-existing conditions.

The states are going to provide "affordable" care? Dang, I wish I'd known that. Now I'm all in favor of this public option thing, as long as the states are going to pay for it. Before, I thought it was the taxpayers who were going to have to pay for this. This makes everything much easier.

I like these signs that are springing up everywhere.

"Project funded by the American Recovery and Reinvestment Act." Oh, really. I thought these make-work projects were being paid for by me and every other taxpayer, but now I find out that this legislation apparently has it's own bank account. Sweet!

 

[eridanus]

The states are going to provide "affordable" care? Dang, I wish I'd known that. Now I'm all in favor of this public option thing, as long as the states are going to pay for it. Before, I thought it was the taxpayers who were going to have to pay for this. This makes everything much easier.

Presumably, if a state opts out, then there will be no public option in that state. Further, if a state opts out, those state residents won't have to pay federal taxes for the health care plan that other states use, and the state can kick the uninsured to their high-risk pool or to the ER. What part of this is confusing to you?

 

[ziggy29]

Trouble for the public option: Joe Lieberman says he opposes the public option and will not vote in favor of invoking cloture to stop a GOP filibuster. Though technically an independent now, he caucuses with the Democrats and is with them on most issues.

Apparently Lieberman wants the bill as is, without attempting to insert the public option back into it:

CNN Political Ticker: All politics, all the time Blog Archive - Lieberman rejects public option, won’t vote for cloture « - Blogs from CNN.com

 

[samclem]

What part of this is confusing to you?

- Why anyone believes that the costs to the residents of a state will be represented on their income taxes, and thereby easily identified and subtracted. As I previously noted, the costs will be paid by residents through scores of other mechanisms not amenable to a simple subtraction from a line on their tax return.

 

[eridanus]

- Why anyone believes that the costs to the residents of a state will be represented on their income taxes, and thereby easily identified and subtracted. As I previously noted, the costs will be paid by residents through scores of other mechanisms not amenable to a simple subtraction from a line on their tax return.

Probably true.