The GOP Health Plan -or-If You're Not Wealthy You're Screwed

[Lord Jim]

House GOP’s health bill would leave 23 million more uninsured, CBO analysis finds

The health care bill Republicans recently pushed through the House would leave 23 million more Americans without insurance and confront others who have costly medical conditions with coverage that could prove unaffordable, Congress' official budget analysts said Wednesday.

Premiums on average would fall compared with President Barack Obama's health care overhaul — a chief goal of many Republicans — but that would be partly because policies would typically provide fewer benefits, said the report by the nonpartisan Congressional Budget Office.

In some regions, people with pre-existing medical conditions and others who were seriously ill "would ultimately be unable to purchase" robust coverage at premiums comparable to today's prices, "if they could purchase at all," the report said. That was a knock on 11th-hour changes Republicans made in the bill to gain conservatives' votes by letting states get waivers to boost premiums on the ill and reduce coverage requirements.

The report said older people with lower income would disproportionately lose coverage. Over half of those becoming uninsured, 14 million people, would come from the bill's $834 billion in cuts to Medicaid, which provides health coverage to poor and disabled people, over 10 years.

http://www.chicagotribune.com/news/nati ... story.html

Okay, since the original House bill would have kicked 24 million off of their healthcare, and this one kicks off 23 million, I guess the way to spin this is:

"New House Healthcare Bill Provides Healthcare For A Million More Americans"...

[Econoline]

Vox.com just posted a good counter-spin to that particular spin:

• The regulatory changes made at the behest of the far-right Freedom Caucus do succeed in yanking insurance coverage from 1 million fewer people than would have lost coverage under the original version of the American Health Care Act.
  
  In exchange, government spending increases by $218 billion over a 10-year period — $218,000 per additional insured person. That’s a lot of money.

They then go on to show that the government could cover more people for less money just by keeping the Medicaid expansion. Their conclusion:

• ...there is a fundamental three-way tradeoff here between the amount of money that you spend, the number of people that you cover, and the extent to which you rely on market mechanisms. What conservative ideologues want to do is choose minimal government spending and maximum reliance on free markets, letting coverage wither in the wind.

https://www.vox.com/health-care/2017/5/ ... is-cheaper

[Scooter]

Republicans are trying to figure out ways to make their health care plan even less popular:

Republicans have found a way to make their healthcare plan even less popular, by taxing employer plans. The idea, which would mean changing how health coverage works for an additional 177 million people plus employers, was raised but not adopted in the House and is now being considered by some senators:

A number of lawmakers are open to the idea, including Sen. Mike Lee (R., Utah), GOP aides said, but there is no consensus yet on whether it should be included in the draft bill being written during this week’s congressional recess. [...]

House Speaker Paul Ryan (R., Wis.), who floated the idea in his own health proposal, has said the tax code unfairly favors people who get their health insurance through work over those who buy it on their own. Republicans, Mr. Ryan said in March, want to “stop the discrimination in the tax code against people who want to go out in a free marketplace and buy the health care of their choosing.”

It’s a strong way to ensure that everyone has an opinion about the Republican plan, to say the least. That’s politics. Straddling politics and policy is another issue: If they’re going to change health coverage for virtually everyone not on Medicare, and if they’re going to tax an additional 177 million people for health care when workers and their employers are already paying premiums and copays and other out-of-pocket expenses … why not single payer? I mean, Republicans would never do single payer because socialized medicine blah blah blah—basically because it’s too good for working people. But might they be creating the conditions of possibility to make single-payer a little more imaginable in the U.S. context if they taxed employer plans?

Anyway, the idea is unlikely to go anywhere because, wow, will it be unpopular. But it sure is interesting where Republican minds go when they look at the healthcare system.

[rubato]

Taxing employer plans, especially "gold plated" plans like the one I have, has been suggested by economists from both ends of the spectrum. It makes economic sense and effects a small number of people so it is politically not popular to go after it.

yrs,
rubato

[Lord Jim]

"gold plated" plans like the one I have my wife has that she keeps me on

Edited for accuracy...

[oldr_n_wsr]

by taxing employer plans

Oh yeah, just what we need.

Taxing employer plans, especially "gold plated" plans like the one I have, has been suggested by economists from both ends of the spectrum. It makes economic sense and effects a small number of people

What makes you think they will only go after the so called "gold plated" plans?
IF enacted, it will go afer ALL plans provided by employers, they'll just declare ALL employer funded plans (even those co-funded by employee/employer) to be Gold plated plans.
The government never saw a possible tax resource it didn't like.

[rubato]

High cost and high value health plans amount to untaxed income for the rich since they are 100% deductible by the employer.


yrs,
rubato

[oldr_n_wsr]

yeah, paying out money for the health plan amount to income (aka money coming in).
Gotcha.

[rubato]

yeah, paying out money for the health plan amount to income (aka money coming in).
Gotcha.

It is income to the beneficiary. If the beneficiary were paid cash and used that to buy HC, as many do, it would be taxed first. So if someone is paid $300,000 per year plus a HC plan worth $36,000 per year the HC plan is untaxed income so that the rest of the taxpayers are subsidizing it. it is a transfer of wealth from the median to the rich.


yrs,
rubato

[Long Run]

Oldr's point is spot on. The ACA has the so-called "Cadillac Tax" which, if it were ever to be implemented, would tax not only the "rich" but many multiples more of regular wage earners. A "Cadillac" tax becomes a Buick becomes a Chevy when it comes to actually raising an appreciable amount of revenue.

[BoSoxGal]

End the Exemption for Employer-Provided Health Care

Joseph Antos, New York Times

The largest tax break in the federal tax code is a stealth subsidy that is both unfair and inefficient. Premiums paid for employer-sponsored health insurance are excluded from taxable income, reducing the amount workers owe in income and payroll taxes by about $250 billion annually. In effect, the exclusion is the third largest health program after Medicare and Medicaid, yet it has been largely ignored as Congress has tried to rein in federal health spending.

That lost revenue is more than enough to cover the cost of providing health insurance to the 42 million people who were uninsured in 2013. In addition, the exclusion has other pernicious effects.

The exclusion is regressive. According to a Joint Committee on Taxation analysis for 2007, the average savings for tax filers with incomes less than $30,000 was about $1,650 compared to about $4,580 for those with incomes over $200,000.

It distorts how workers are paid. Many workers do not realize that their employer’s contribution to the health insurance premium comes at the cost of lower cash wages. This has contributed to a shift from (taxable) cash wages to (nontaxable) health benefits. Between 1999 and 2014, the average employer contribution for family coverage nearly tripled while wage rates increased by only about half.

The exclusion fuels the growing cost of health care. There is no upper limit on the amount that may be excluded from income. That encourages workers to buy generous insurance that offers lower cost-sharing but higher tax-free premiums. Such coverage makes consumers less price-sensitive and promotes the use of medical services that may provide little value. According to the Institutes of Medicine, 30 cents of every dollar spent on health care in this country is wasted, in part because of the financial incentives of the exclusion.

The “Cadillac tax” — a 40 percent excise tax on high-cost health insurance that exceeds limits set by the Affordable Care Act — is a poor way to correct those perverse incentives. It is a blunt tool that ultimately will hit even moderate-priced health insurance (because of indexing), and one that continues to foster misunderstanding about who is actually paying when the employer makes a contribution to the benefit. But the tax has triggered a shift toward leaner insurance plans, and more employers are considering moving to a defined contribution approach to health benefits that will focus worker attention on what they can do to cope with rising health costs.

[Gob]

Taxing employer plans, especially "gold plated" plans like the one I have means I'm a Champagne socialist.

yrs,
rubato

[Scooter]

This is a complex issue that doesn't have easy answers. The same question is being looked at in Canada, where the tax implications are less significant because employer-paid insurance covers only those costs not covered by public health coverage. The debate is not helped by false or misleading statements such as this:

The exclusion is regressive. According to a Joint Committee on Taxation analysis for 2007, the average savings for tax filers with incomes less than $30,000 was about $1,650 compared to about $4,580 for those with incomes over $200,000.

A tax measure is regressive if those at lower incomes are paying a higher percentage of their incomes (or saving a lower percentage of their incomes) than those earning higher incomes. Since, based on the numbers given, someone earning $30,000 is saving 5.5% of their income due to the exclusion, while someone earning $200,000 is saving 2.3%, the exclusion of employer-paid health premiums is in fact progressive, not regressive.

It distorts how workers are paid. Many workers do not realize that their employer’s contribution to the health insurance premium comes at the cost of lower cash wages. This has contributed to a shift from (taxable) cash wages to (nontaxable) health benefits. Between 1999 and 2014, the average employer contribution for family coverage nearly tripled while wage rates increased by only about half.

So what if employers had given their employees the additional amount in wages rather than paying their health care premiums? Would employees have been able to go out and purchase equivalent insurance with the difference? No, they would not, because group insurance is almost always cheaper than an individual policy.

Are individuals not allowed to claim a tax deduction for health insurance premiums they pay for themselves and/or their families? It would seem to me that this would eliminate or at least in large part mitigate any distortion caused by not taxing employer-paid premiums in the hands of employees.

[Guinevere]

So I negotiate a salary and benefits that includes a top tier health insurance plan with premiums paid mostly by my employer. We both figure the cost and avoided cost of that benefit into the negotiation, and come to agreement. Why should either of us get penalized for that calculation?

[Guinevere]

Scooter, agreed that the tax is not regressive, but progressive.

Also, individuals can only deduct health insurance premiums as part of the medical expenses deduction which has a floor of 10% of AGI (7.5% if you're over 65). Health insurance premiums paid via pre-tax cafeteria plans cannot be included. I've never even come close to the floor. Anyone employed and reasonably healthy, with decent employer provided health insurance probably doesn't either.

[oldr_n_wsr]

yeah, paying out money for the health plan amount to income (aka money coming in).
Gotcha.

It is income to the beneficiary. If the beneficiary were paid cash and used that to buy HC, as many do, it would be taxed first. So if someone is paid $300,000 per year plus a HC plan worth $36,000 per year the HC plan is untaxed income so that the rest of the taxpayers are subsidizing it. it is a transfer of wealth from the median to the rich.


yrs,
rubato

So paying out money (for HC or a widget) means I (and/or my employer) earn money.
Gotcha.
sounds like a business model someone should get into

[Big RR]

Oldr--if your employer provided you a place to live it would likely be taxed as income because it is a benefit to you; likewise if they gave you a car you could use for your personal needs, or free dry cleaning, or whatever. All of these are not transfers of money, but provide a benefit to you that you now do not have to pay for so they are taxable. Why should healthcare be any different?

[oldr_n_wsr]

Whether or not to tax the plans was not my point. My point was that money being spent either by me and/or my employer (for HC or a widget) does not bring in money to me or my employer (as was implied). All the tax break does is allow us to keep more of the money we already earned.

We can discuss whether or not any health plans should or should not be taxed but that is seperate from my original point.
For the record, my default position is "no additional taxes". But I think you know that.

And as for taxing only top tier plans (aka cadillac plans) and not lower tier plans is totally wrong and "discriminatory" (for lack of a better word).
I would think that employers (and thier insurance carriers) would then come up with a plan that is just a little less than cadillac to avoid the tax. Then the gov would realize that they are not getting "their" expected revenue and lower what is defined at "cadillac". Sooner or later all plans (including the Yugo plans**) will be taxed.



** Yugo plan=you go die

[Big RR]

Well oldr--the proposed elimination of a tax break would not directly affect any employer and their tax base, as employers can deduct all payments for benefits (just as they can deduct wages paid). As for the so-called Cadillac plans, these are offered only to the top earners, while everyone else gets the ordinary plan. It is a way of giving that person additional income tax free, and that reduces the revenue that the government gets--this has to be made up somehow. Now I am aware that you think the government would just waste most of the revenue it gets so it doesn't matter, but if my plan costs $50,000 more than yours because of the enhanced benefits I like, I am getting an additional $50,000 ta free (or $20,000 less in taxes at a 40% marginal rate), which then must be made up from somewhere.

Personally, I think all employer supported healthcare should be taxed as income, if only to hammer home to the people the real cost of their health care and to realize that they are getting this instead of additional wages, but at least taxing the high end plans for the excess money spent makes a lot of sense IMHO. Unless you just wna to continue borrowing to pay for our current expenses.

[Lord Jim]

The exclusion is regressive. According to a Joint Committee on Taxation analysis for 2007, the average savings for tax filers with incomes less than $30,000 was about $1,650 compared to about $4,580 for those with incomes over $200,000.

A tax measure is regressive if those at lower incomes are paying a higher percentage of their incomes (or saving a lower percentage of their incomes) than those earning higher incomes. Since, based on the numbers given, someone earning $30,000 is saving 5.5% of their income due to the exclusion, while someone earning $200,000 is saving 2.3%, the exclusion of employer-paid health premiums is in fact progressive, not regressive.

LOL

Another beautiful example of rube math....(must be tough being a "scientist" who can't calculate simple percentages... I imagine that's a real handicap in a scientisting gig)

Rube, if I were you, I wouldn't take that...

Please come back again and tell everyone how you're actually right...


(that's always so hilarious...



I know you usually carry you own, but just in case: