Bush's Health Plan--merged threads

[Martha]

From MKLD's link -

"Bush's proposal would for the first time allow people to take a tax deduction -- similar to the one used by homeowners for their mortgage costs -- when they buy health coverage on their own instead of through an employer."

I assume this is another example of a reporter not knowing what she is talking about (or maybe just sloppy writing). If the deduction is like home mortgage interest, it would require itemizing on schedule A. I would assume the proposal would be to give an above the line deduction similar to an IRA (not mortgage interest), which would help more middle-class folks. Does anyone know more about how this is really supposed to work?

We might know more after the presidents speech tonight. What I heard is that it would be a "standard deduction" of $15,000 on joint returns for family coverage or $7500 for single coverage, in the nature of an above the line deduction.

Wyden, who has promoted a national plan through regulation of insurance companies, has come out with the same criticism I mentioned above--the plan does nothing to fix the broken market where insurance companies are allowed to cherry pick. It will do nothing to make insurance either available or affordable to the less healthy and older groups.

 

[brewer12345]

It will do nothing to make insurance either available or affordable to the less healthy and older groups.

That's the biggest problem. The people who are most at risk and least able to afford coverage won't have a magic fix appear from a tax deduction. And since the free-spending Rethuglican congress is gone, I can't see this boondoggle going anywhere.

 

[mykidslovedogs]

Wyden, who has promoted a national plan through regulation of insurance companies, has come out with the same criticism I mentioned above--the plan does nothing to fix the broken market where insurance companies are allowed to cherry pick. It will do nothing to make insurance either available or affordable to the less healthy and older groups.

Martha,
My husband is a little more in tune with the legislation than I am, but we were talking about this last night, and he is under the impression that a tax CREDIT will be proposed for the low income folks, so if that's the case then the plan will help the less healthy and older groups. Especially if the credit exceeds the premium enough to allow them to open an HSA and put the whole balance in an HSA account to help pay for deductible expenses.

 

[lets-retire]

Martha--I think it might even exacerbate the problem. I could see the insurance companies having premiums in line with the standard deduction. So my $4100 employer provided policy would now cost closer to $7500.

This is a common practice with rents around military bases. Landlords of detached housing will check the housing allowance rates for their target occupant's rank and charge accordingly.

 

[FIRE'd@51]

What I heard is that it would be a "standard deduction" of $15,000 on joint returns for family coverage or $7500 for single coverage, in the nature of an above the line deduction.

Thanks, Martha.

Wyden, who has promoted a national plan through regulation of insurance companies, has come out with the same criticism I mentioned above--the plan does nothing to fix the broken market where insurance companies are allowed to cherry pick. It will do nothing to make insurance either available or affordable to the less healthy and older groups.

I agree with you on this part. It seems to me a very large part of the problem with our health insurance system is access. So far, Wyden's plan is the only serious one I have seen that seems to deal with that problem. BTW, I haven't heard anymore about Wyden's proposal since he introduced it. I guess it's been completely overshadowed by Iraq (which is understandable).

 

[mykidslovedogs]

It seems to me a very large part of the problem with our health insurance system is access. So far, Wyden's plan is the only serious one I have seen that seems to deal with that problem. I guess it's been completely overshadowed by Iraq (which is understandable).

Hi Fire'd. You might be interested in this document published by NATIONAL CENTER FOR POLICY ANALYSIS, regarding the uninsured and access issues.

http://www.ncpa.org/pub/ba/ba460/

(it is a little outdated, but provides some insight)

 

[mykidslovedogs]

Here is a really detailed interview regarding the upcoming proposals:

http://www.whitehouse.gov/news/releases/2007/01/20070122-7.html

 

[Martha]

Hi Fire'd. You might be interested in this document published by NATIONAL CENTER FOR POLICY ANALYSIS, regarding the uninsured and access issues.

http://www.ncpa.org/pub/ba/ba460/

(it is a little outdated, but provides some insight)

The problem with the numbers in that article is that no context is provided for interpretation. For example, the article states: From 1993 to 2002 the number of uninsured people in households with annual incomes above $75,000 increased by 114 percent. This is true based on census numbers. However, what the article does not say is that there was a corresponding increase in the number of households with incomes above $75,000. Other researchers have found that the increase of uninsured in that group basically follows the increase in the number of people in that group.

More telling is the percentage of uninsured in a particular income group and what do those uninsured look like: are they working? are they healthy? are they young? Do they have children? When you look at these numbers you will see that lower-income adults (earning under $20,000 a year) remained the most likely to be uninsured, with over half the people in that group uninsured for at least part of the year. You will also see that 59% of those who were uninsured had chronic health conditions like asthma or diabetes. The Census Bureau, Kaiser Foundation and Commonwealth Fund (http://www.cmwf.org/) have a lot of the numbers.

The Census Bureau reported that we are at 45.8 million uninsured. If you look at how people people were uninsured for part of the year, the number goes up to about 87 million.

 

[Martha]

Here is a really detailed interview regarding the upcoming proposals:

http://www.whitehouse.gov/news/releases/2007/01/20070122-7.html

Thanks. It confirms that the plan does nothing about access issues and that is left to the states:

Q One other question. For those that are uninsured now, it's arguable that some of them, because they don't have insurance, or have preexisting conditions that might be rejected, or they might have to pay quite a bit more for a standard policy, and how does your plan address --

MS. GOON: Well, this gets back, again, to the Affordable Choices Initiative with the states, and working with the states to encourage better funding of uninsurable risk pools, which many states have, some states don't; but working with the states to really identify how best to target additional subsidies to people who need insurance in that state. In many cases, it will be people who have preexisting conditions, in other cases it will be more of the poor.

 

[Helena]

Here is a really detailed interview regarding the upcoming proposals:

http://www.whitehouse.gov/news/releases/2007/01/20070122-7.html

Quote from article:

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...



And... just like any other form of wages....
will your employer's cost of your health insurance be
also be subject to Social Security and Medicare taxes

That question was not asked in the article

 

[mykidslovedogs]

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/taxes/health_proposal_effect/?postversion=2007012321

 

[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/releases/2007/01/20070122-7.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]

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/taxes/health_proposal_effect/?postversion=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]

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]

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]

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

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.