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FACT CHECK: White House ignores health concession

celticlord said:
However, your experience is by far the exception rather than the rule. For a great many reasons, but most of all because of the tax treatment of health insurance, the vast majority of people with health insurance have health insurance through their employer.
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I certainly accept that they do; I don't accept the idea that it's your only option.
 
talloulou said:
Having health insurance tied to your employer is one issue. No decent options for small businesses with few employees is another issue. Having insurance companies drop folks from the plan as soon as they become chronically ill is another issue. Pre-exsting conditions is another issue.

There's a whole host of things that the free market simply isn't fixing and insurance companies are making oodles of money off this riot.
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There is no free-market in the health insurance industry; consumers aren't even allowed to purchase health insurance provided in other states.
 
Celticlord,

I find for perhaps the 2nd time something we both agree upon.

Good point. It would make sense to simply remove the tax burden from the consumer, but I doubt it would win support because big businesses don't want to lose this exclusive tax deduction. It would be one less tax write-off big corperations couldn't use.

But here I agree with you 100%. Removing the tax deduction would open the marketplace not only regionally but nationally.

Here's another proposal to health care reform I think you'd agree with. Eliminating Medicare and expanding Medicaid.

The central issue with health care reform as it attempts to cover the uninsured (or under-insured) is opposition to government-run health care. Well, since Medicare is eating away at the budget and most of the health care reform initiatives would place more people on Medicaid anyway, why not simply expand Medicaid to include four levels of coverage:

Basic - limited to new borns and people up to 21 years of age.

Prime - limited to people age 21-45.

Premium - limited to people age 45-62.

Plus - exclusive to those individuals age 62 and older.

The HCR bill already has a stipulation in it whereby the states could form their own Health Insurance Exchange as long as it mirrors the public option exchange. In doing so, the HCR bill requires of states to provide matching funds to cover the cost of health insurance within their state. Since Medicaid already has this same requirement, why not simply expand it, continue with the establishment of the Health Choices Exchange Trust Fund as called for under the HCR bill only rename it to fit Medicaid and then provide additional funds to the states to incorperate the new admittees? This would make far more sense to me than trying to lump the public option with private health insurance reform.

Thoughts?
 
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Harshaw said:
I certainly accept that they do; I don't accept the idea that it's your only option.
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For most people, the employer subsidized option is cheaper than purchasing on their own.

The way the economics of health insurance are skewed, it is the most rational option for most people, given the information they have at hand.
 
Ethereal said:
There is no free-market in the health insurance industry; consumers aren't even allowed to purchase health insurance provided in other states.
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bingo

this is the first obvious step to real control of skyrocketing costs

free up consumers to purchase insurance across state lines

then---tort reform, or its flipside, malpractice control

of course, these republican resolves are thoroughly irrelevant

the reds don't register

the ball is entirely obama's and his party's

but they're fumbling

and the gop is in EASY positioning to recover

starting in richmond and trenton, nov 3, less than 80 days

thanks, ethereal, good point
 
Health insurance is hardly the only area where state-line insurance rules cause big problems.
 
Objective Voice said:
Celticlord,

I find for perhaps the 2nd time something we both agree upon.

Good point. It would make sense to simply remove the tax burden from the consumer, but I doubt it would win support because big businesses don't want to lose this exclusive tax deduction. It would be one less tax write-off big corperations couldn't use.

But here I agree with you 100%. Removing the tax deduction would open the marketplace not only regionally but nationally.
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That's just it. I don't think employers would really mind. Keep in mind that employer-based health insurance became the norm by accident: employers offered it as a way to sidestep wage controls imposed during WWII.
World War II created health insurance perk | detnews.com | The Detroit News

All employers would have to do to maintain the tax deduction is cancel the insurance plan and funnel the money into direct payroll expense.

Hell, most employers would be thrilled because not having to manage insurance plans would streamline their administrative staffs (most of what an HR staff does is manage benefits); convert the benefit to cash, keep the tax deduction at the corporate level, and employees use the additional cash to buy their own insurance (or not, as their circumstances and desires dictate).

Small businesses--the largest single source of job growth in the United States--would be overjoyed at the change, because benefits are a burden to them because of their small staff size.

The bottom line is this: there is no economic equity or justice provided by employer-subsidized insurance.

Which returns to the same question: Why is the majority party ignoring this obvious (and fairly easy) win on health care?
 
talloulou said:
Just read page 65 and fail to see the claim you're asserting for that page too. Taxpayers will subsidize all community organizers and retired union workers.... I don't see that there.
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That's because you're not a lawyer / IRS code expert.

SEC. 164. REINSURANCE PROGRAM FOR RETIREES.
(a) ESTABLISHMENT.—

(1) IN GENERAL.—Not later than 90 days after the date of the enactment of this Act, the Secretary of Health and Human Services shall establish a temporary reinsurance program (in this section referred to as the ‘‘reinsurance program’’) to provide reimbursement to assist participating employment-based plans with the cost of providing health benefits to retirees and to eligible spouses, surviving spouses and dependents of such retirees.

(2) DEFINITIONS.—For purposes of this section:

(A) The term ‘‘eligible employment-based plan’’ means a group health benefits plan that—

(i) is maintained by one or more employers, former employers or employee associations, or a voluntary employees’ beneficiary association, or a committee or board of individuals appointed to administer such plan, and

(ii) provides health benefits to retir-
ees.

<break>

page 65-66

Proposed Health Care Bill (2009)
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---

Voluntary Employee Beneficiary Association- 501(c)(9)

A voluntary employees' beneficiary association (VEBA) under Internal Revenue Code section 501(c)(9) is an organization organized to pay life, sick, accident, and similar benefits to members or their dependents, or designated beneficiaries if no part of the net earnings of the association inures to the benefit of any private shareholder or individual. The organization must meet the following requirements:

1. It must be a voluntary association of employees;
2. The organization must provide for payment of life, sick, accident, or other similar benefits to members or their dependents or designated beneficiaries and substantially all of its operations are for this purpose; and
3. Its earnings may not inure to the benefit of any private individual or shareholder other than through the payment of benefits described in (2) above.

Membership of a section 501(c)(9) organization must consist of individuals who are employees who have an employment-related common bond. This common bond may be a common employer (or affiliated employers), coverage under one or more collective bargaining agreements, membership in a labor union, or membership in one or more locals of a national or international labor union. An organization that is part of a plan will not be exempt unless the plan meets certain nondiscrimination requirements. However, if the organization is part of a plan maintained under a collective bargaining agreement between employee representatives and employers, and such plan was the subject of good faith bargaining between such employee representatives and employers, the plan need not meet such nondiscrimination requirements for the organization to qualify as tax exempt.. For more information, see Voluntary Employees' Beneficiary Associations.

An organization will not be treated as exempt under section 501(c)(9) unless it gives timely notice to the IRS that is it applying for recognition of such status. See When to File in the instructions to Form 1024 for more information.

Voluntary Employee Beneficiary Association - 501(c)(9)
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If we're going to have health care reform, then let's have health care reform and not just another wasteful entitlement program for the welfare class.
 
talloulou said:
I think many of the issues are a direct result of having your health insurance tied to your employer.
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People always have the option of refusing their employer's offerings and buying their own -- for the last 9 years, that's exactly what I have done, with the money he pays me in salary instead of benefits.

And in any case, this doesnt really do anything to address what I said -- that the 'problems' you cite stems from health care being a for-profit business.

How is government the -only- solution to that 'problem'?
 
Redress said:
The program was well concieved, provable by it's success in putting large numbers of people in more efficient vehicles than they already had.
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That's not proof of successful conception of the program itself, that's proof of popularity. As I said before, and as you have ignored, popularity proves nothing regarding efficacy or propriety.

By the way, your arguing against this program still is amusing.
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Better amusing than pathetic, as was your defense of The Obama's policy that put thousands of vehciles that get 15-18MPG on the road, and your deliberate failure to understand that "better" can still be "piss-poor".
 
celticlord said:
However, your experience is by far the exception rather than the rule. For a great many reasons, but most of all because of the tax treatment of health insurance, the vast majority of people with health insurance have health insurance through their employer.

There is no inherent economic rationale for this, it merely is how the system is today.
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It doesnt -have- to be this way, true -- it is this way because benefits are a means to attract employees. That's the rationale, and as it has to do with th elabor market, it is 'economic' in nature.

Why should health insurance be tax deductible to employers but not tax deductible to employees? Why should workers be penalized in this fashion?
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They should not be.

If ever there was a case where a tax benefit should be removed from companies and applied to individuals, it is the tax deductability of health insurance.
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Or, just add the tax benefit to those that do not have it -- no need to remove it from anyone.
 
Goobieman said:
Or, just add the tax benefit to those that do not have it -- no need to remove it from anyone.
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Removing the tax benefit from employers is an equalization measure that benefits small employers--who create the vast majority of new jobs in this country. Small employers with small insured pools have a hard time offering the benefit and thus are in large part excluded from that tax benefit.

There is a need to remove the tax benefit from employers--to stimulate small-business employment.
 
celticlord said:
Removing the tax benefit from employers is an equalization measure that benefits small employers--who create the vast majority of new jobs in this country. Small employers with small insured pools have a hard time offering the benefit and thus are in large part excluded from that tax benefit.

There is a need to remove the tax benefit from employers--to stimulate small-business employment.
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Dont small businesses already have the tax credit?
How does removing their tax benefit (and thusly raising their taxes) benefit them?
 
Goobieman said:
That's not proof of successful conception of the program itself, that's proof of popularity. As I said before, and as you have ignored, popularity proves nothing regarding efficacy or propriety.
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Except you are ignoring that I stated the program did exactly what it was designed to do. That is a well designed program.


Better amusing than pathetic, as was your defense of The Obama's policy that put thousands of vehciles that get 15-18MPG on the road, and your deliberate failure to understand that "better" can still be "piss-poor".
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And you fail to understand that if every vehicle bought under CARS gets better gas mileage than those traded in, that lowers demand for gas, not raises it. To suggest otherwise is to prove that you are more interested in trying to make political points than in facts.
 
Goobieman said:
Dont small businesses already have the tax credit?
How does removing their tax benefit (and thusly raising their taxes) benefit them?
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In reality, no, small businesses do not have the tax credit. The smaller the business the more costly health insurance--even with the tax advantages, it still is too much of an expense for small businesses to sustain.

Thus removing the tax deductibility of health insurance premiums from employers, by removing a putative benefit that small companies in most cases are unable to utilize in the first place, while simultaneously relieving all companies from the expense of health insurance premiums and the administrative burdens of managing insurance plans, is a net economic benefit to small businesses.
 
Redress said:
Except you are ignoring that I stated the program did exactly what it was designed to do. That is a well designed program.
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You apparently dont realize that this is not necessarily true, as realizing anticipated results do not necessitate a well-designed plan...

And you fail to understand...
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No, I fully inderstand that you will defend The Obama, regardless.
 
celticlord said:
In reality, no, small businesses do not have the tax credit. The smaller the business the more costly health insurance--even with the tax advantages, it still is too much of an expense for small businesses to sustain.
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Can you show that the savings in premiums will offset the increased tax?
 
celticlord said:
Marginal tax rates make it mathematically certain in all cases.
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Doesn't that depend on the supposed savings on premimums?
Can you show that they will drop to exceed the tax saving?
 
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Goobieman said:
Doesn tthat depend on the supposed savings on premimums?
Can you show that they will drop to exceed the tax saving?
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They can't do otherwise.

This is how corporate tax rates break down (federal tax only--states vary):
http://www.smbiz.com/sbrl001.html

Code: 
       Taxable income over     Not over      Tax rate

          $         0        $    50,000        15%
               50,000             75,000        25%
               75,000            100,000        34%
              100,000            335,000        39%
              335,000         10,000,000        34%
           10,000,000         15,000,000        35%
           15,000,000         18,333,333        38%
           18,333,333         ..........        35%
The tax advantage of health premiums to the employer is that it is a reduction to income before taxes. (e.g., if a company has revenues of $51,000 and insurance premium expense of $2,000, it's taxable income is $49,000).

At taxable income of $49,000, a company would owe 15% of that in taxes, or $7,350.

Remove the insurance expense as a tax deduction, and taxable income rises to $51,000, with a tax bill of $7,750 ($50,000*15% + $1,000*25%).

Thus, residual income after expenses and taxes breaks down like this:

With tax deductible insurance premiums:

$51,000
($2,000)
--------
$49,000
($7,350)
--------
$41,650
======

Remove insurance premiums:

$51,000
($7,750)
--------
$43,250
======

Because tax rates are less than 100% for all levels of income, every dollar of expense eliminated will always exceed the additional tax burden generated by that savings.

If one imputes a decline in average premium cost across the whole of society (for the sake of argument, assume a 25% reduction in premium cost, which means an individual ends up purchasing the same insurance for 25% less than what his employer could previously), then employers would have to raise salaries by less than the previous cost of premiums to provide workers with the same compensation economically. Instead of paying $2,000 in insurance cost, an employer might have to pay an additional $1,600 in payroll expense (which is still tax deductible), resulting in a tax expense in this scenario of $7,410.

Thus:
$51,000
($1,600)
--------
$49,400
($7,410)
--------
$41,990
======

The breakdown may be summarized thus:

  • Scenario 1: Removing the tax advantage of health insurance benefits to employers and pushing health insurance purchases to the individual at worst shifts the cost of insurance to the employer into direct payroll, meaning all employers have the same tax burden as before, but with higher wages for workers. Workers gain Employers break even.
  • Scenario 2: Removing the tax advantage of health insurance benefits to employers and pushing health insurance purchases to the individual at best eliminates the cost of insurance to the employer. Workers break even Employers gain.
  • Scenario 3: Removing the tax advantage of health insurance benefits to employers and pushing health insurance purchases to the individual at best eliminates some of the cost of insurance to the employer, with the rest shifting into direct payroll. Workers gain Employers gain.
Scenario 3 is the most likely scenario (expanding health insurance market places would exert significant downward pressure on prices), which is why eliminating employer subsidized insurance is the economically prudent and ethically appropriate action to take, regardless of all other health care economic considerations.
 
celticlord said:
They can't do otherwise.
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While I appreciate the work you put into this post (and, understand that I am genuine asking for information), doesnt all of this assume that there -is- a reduction in premiums?

Lets say you pay $10k for insurance per year, which nets you a $1500 savings in taxes. To break even, don't your premoums have to drop by $1500?

How do you know that will happen?
 
talloulou said:
Healthcare could obviously do with lots of reform whether or not there is a public option.

I personally am a tad disappointed they seem to be giving up on this whole public option thing so easily.
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Not me; I want them to start acting like the party they claimed and sit down with Conservative Democrats, Independents and Republicans and actually try to make reforms that make SENSE and do not require the Government sinking the American public deeper into debt with asinine Government programs that do nothing but INCREASE the costs, provide MEDIOCRE level of care and provide LESS choice.

The PUBLIC option is a really DUMB idea of the highest order.
 
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