Congress Considers Partially Removing Tax Exemption On Employer Provided Health Benefits
Would you be willing to pay more in taxes in order to fund a more equitable health care program for the nation's uninsured? From MSNBC:
While details of such an approach are still sketchy, it would likely involve employees paying tax on a percentage of their employer-provided health benefits. So if Congress decided that all such premiums in excess of $11,000 for family plans would be taxable income, and your company paid premiums worth $16,000 for your coverage, you'd have to pay taxes on $5,000.
Of course, this is only in the discussion phase right now, and there's nothing definite. It's one option being floated as Congress begins to discuss how to actually make President Obama's proposed health insurance reform package a reality. It's also something John McCain proposed last year, and for which Obama criticized him. And look who else has proposed it:
In 1984, President Ronald Reagan floated the idea of requiring workers to pay taxes on employer contributions to their health insurance exceeding $2,100 a year. A Washington Post editorial the following year called the proposal "surprisingly lucrative yet eminently fair," and speculated that "(it) might have helped hold down health care costs in the bargain." But opposition, especially from labor unions, scuttled the proposal.
"Health insurance ‘haves' to pay for ‘have-nots'?" [MSNBC]
(Photo: PhotoDu.de)
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Comments:
Given how crummy some employer health plans are (especially small businesses who can't afford a decent plan for the employees who make the company successful), the employee might be better off declining his employer health plan and going for the government plan. No taxes paid at all!!
I was willing to pay this when Bush floated a trial balloon and when McCain proposed it, in both cases because it would make it easier for folks like my sister and her self-employed husband to insure their family. Separated from private-sector insurance access improvements, however, it is worse than useless: It sets a de facto going rate for insurance coverage, even if good coverage would be less in some states than the new threshhold.
No thank you.
It takes even more money out of the economy and making things "equitable" sounds like "All animals are equal, but some animals are more equal than others" with an unhealthy side order of redistribution of wealth in this health care ruining package.
I'll support this when they also remove tax-exempt status from churches and religious organizations.
I believe John McCain suggested this during the presidental campaign. Term limits for all these SOBs in Congress please! We're not going to suffer through Obama for more than eight years, why can't we amend the Constitution to give these Republicans/Democrats (is there really a difference?) in Congress the boot, too?
It was a turd of an idea when McCain proposed it during the election and it is a turd now. We already pay an insane about of money every year between premiums and out of pocket that insurance doesn't cover. On a good year health care costs exceed any other bill including our mortgage.
Way too many people are struggling right now with lay offs and wage cuts. Yea make it an even bigger burden.
There are plenty of good ideas to fix health insurance, this is not one of them.
Silly you. When McCain talked it about it was a mean Republican, now it is a nice Obama, big difference.
@PDQ2: Why would any employer pay for health care when the government gives it away for "free"? Why would any employee pay taxes on his employer's health care plan when he can ditch it and go with the government-provided system?
@nataku83: McCain's plan was to give a $5,000 tax credit to individuals and $10,000 credit for families to cover the purchase of their own plans. Of course, practically nobody in the media accurately told you about the tax credit part and the Obama campaign savaged McCain about taxing employer-provided benefits. Now we're gonna get that without the tax credit and without the portability it would have provided.
Just make a socialised healthcare system already. S**t or get off the pot I say.
@frank64: Is it Obama? Last I looked Obama and the Democratic congress dont walk hand and hand. Just because some congressmen put it forward doesnt mean Obama would go with it.
@frank64: And do we get the $5,000 individual and $10,000 family tax credit to cover the cost of purchasing our own health insurance? What? We don't?
After we pay Federal income tax, state income tax, county/local tax, social security tax, medicare tax, sales tax on our purchases, excise taxes, auto taxes, et al., we all pay about 50% of our total income in taxes. I am utterly unwilling to nod approval toward any more bills that will summarily increase our taxes in any way.
We don't need more taxes. We're already being taxed to death. The government needs to stop throwing money away and carefully examine where fat can be trimmed (there is so, so much of it but one side or another will always claim this or that spending is necessary...) and all that needed money for other programs will magically appear.
I've almost never had health insurance and never needed it. I have an HSA for incidentals. I single-parented a child while making barely above minimum wage without coverage or government assistance - it wasn't easy but it was possible.
All I want is affordable major medical only for myself and my current (retired) husband, to cover injuries due to major accidents or catastrophic illness. I can't even find a provider who will write this sort of policy at all. So I don't carry insurance and figure on dying if something too expensive occurs. I'm cool with that - it's called personal choice and responsibility.
At this point in my life - closing in on retirement age myself - under no circumstances will I pay out of pocket for insurance, and under no circumstances will I accept the usual employer-provided insurance, which costs money from my paycheck I need to save and, based on the experiences of my coworkers, won't cover anything anyway.
I am entirely against socialized medicine - it has destroyed the quality and accessibility of health care everywhere it has been implemented - and no one I know wants to participate in it and we all consider mandatory health insurance to be highway robbery and a reason to move elsewhere.
At what point will the government take NO, LEAVE ME ALONE for an answer?
would i support this? no. that is, unless some provision in the bill redefines "groups" so that small businesses can afford coverage that's equitable to what larger companies provide.
right now, i work in a small office & quite frankly, my coverage is expensive & not really that great. $10,000/year - that's the cost. no vision, the dental plan is atrocious, scrips are expensive unless they are mainstream/generics & every year i get a new 20-page booklet of exclusions.
if you want me to pay more for my coverage then i expect my employer to be able to participate in group plans with other employers so that the cost of my coverage can go down, my benefits can go up or some combination of the two.
@Jim Topoleski: No, you are right. But it made the headlines today that he wasn't ruling it out. I don't think he actually likes the idea. One reason may be his campaign stance. But he can have the best of both world by "reluctantly"letting the Dem Congress have their way. Just how politics works.
@HiPwr: Because if you are eligible for health insurance through an employer you generally don't qualify for gov't plans (at least where I live)
@Hongfiately: Yeah, that would be out the door. Even some mainstream health experts during the campaing were saying it was actually the lower cost idea for lower income with the tax credit. Details don't sell well in a campaign. It is why we are in the mess we are in so many issues.
McCain's plan included removing the exemption from taxation of employer-provided plans, but also replaced it with tax credits to offset the purchase of private health insurance ($2,500 for individuals and $5,000 for families -- had the amounts wrong in earlier comments). The tax credit information always seems to get left out of most discussions.
I'm totally up for discussion ironing out the details, but I'm all for removing any and all tax impact on healthcare and for maximizing portability rather than trying to achieve universal coverage.
Yay, just what I need, 40% or 45% of my income disappearing before I ever see it instead of 33%. Somebody tell me again why the hell I get up and go to work every day again....
@smileboot: Agree. I've lived in two different countries with nationalized health care now (actually had to have full-blown surgery and a hospital stay in one), and I was very satisfied with the quality of care I received. Far more satisfied than I was here in the good old U.S. of A. with our fabulously advanced system, in which my father died as the result of medical malpractice. Whoops. Guess his doctor didn't get the memo that we're supposed to have better quality of care here.
I sometimes wonder whether those who are so adamantly against any sort of nationalized health system have ever actually lived in a country that has one. I know most of the people I've spoken two about this in person have not. Here, I have no idea.
@Keter: do you have an actual hsa tied to an insurance paln, or a savings account you set aside for medical expenses? Because most hsa plans do cover major medical, while you pay for the incidentals out of your hsa.
@WraithSama: I'll take the wind out of someone's sail and ask "where were you when the GOP controlled government & were spending like it was going out of style?"
I don't know where you were, but I was raising hell about that too. The justification from the hyper-partisans for massive waste and abuse always seems to be "the other party did it too".
Let's get past that crap and stop this out-of-control spending now. We could probably pay for socialized medicine and a lot of other things if we just trimmed down excesses. That's REAL change, not rhetoric.
@Keter: SINGLE PAYER INIVERSAL HEALTH CARE HAS WORKED SUCCESSFULLY IN EVERY COUNTRY IT HAS BEEN IMPLEMENTED. YOU HAPPEN TO BE LUCKY TO HAVE NOT NEEDED IT, BUT GUESS WHAT, YOU HAVE ONE ACCIDENT AND DIE AS A "SINGLE PARENTS" GUESS WHO HAS TO RAISE THE BRAT YOU BROUGHT INTO THE WORLD. YOU GOT LUCKY, SO DONT PREACH ABOUT PERSONAL RESPONSIBILITY; IT WAS PERSONAL LUCK
@ideagirl: I wouldn't be eligible. My employer says "screw that, we lose more money if we provide health care. Cancel everyone and let the government pay for it."
@TheDustball:
I agree. Why not tax churches? Seems like a good way to fill a tax gap. Some of these mega-churches are serious cash-cows. Why shouldn't they pay taxes on that income?
@I Love New Jersey:
Agreed. I'm sorry, I work too hard for my money to see my taxes raised to support other people. People should be expected to pay their own way.
To I Love New Jersey:
As someone long uninsured and employed, I would say that we currently have UPWARD redistribution from the working uninsured to (largely) the working insured.
If worker Joe is paid $25K with no employer-provided benefits, and Bob is paid $22K with a generous fringe package, please tell me why Joe should pay more tax than Bob, even though Bob is better off than Joe?
If that is not redistribution, what do you call it?
@nataku83:
Mccain was stupid. He should have just did what Obama did. Lie about it during the election and then once firmly in place, backpeddle on everything.
@FaustianSlip: yes, because one doctor who was tired or forgot one thing for one moment means that the system is broken. I'm sure you sued, since you're so ready to claim malpractice. That means that the hospital's insurance goes up, the doctor's insurance goes up and he possibly loses his job, and so the cost we all have to pay goes up and there might be one less doctor, leaving more burden on the others. We are so damn fabulously advanced but people have unreasonable assumptions about what it means to be advanced - it means we have the ability, but as always, your mileage may vary.
@HiPwr:
It just goes to show that being a two-faced sob in politics pays dividens. Yes we can, my ass.
Is this the same general idea as one has to live in a communist country before rejecting communism or one actually has to live in France before mocking the French?
To be fair, there is a substantial difference in these plans: McCain wanted to tax these benefits, give a small portion back as a credit, and encourage more people to buy plans on "the market". It included no plans expand insurance coverage to people who are currently uninsured, and would not have helped those who are limited by a pre-existing condition.
This current plan wants to use a similar tax, but use the proceeds to pay for a public option plan that will (in theory) drive down healthcare costs for everyone. The public option plan, in theory, will be a more affordable option for those without coverage and will accept those "higher-risk" folks with pre-existing conditions.
Unions, whose workers have worked for years to get more generous health packages from employers, obviously stand to lose more from this.
@Megalomania: Disregarding the fact that I like that idea, I think the fact that they have tax-exemption is a "slippery slope" the other direction anyway since they don't really deserve it.
They should just be taxed like any other corporation, no more or less. No special status either way.
@Keter: In a perfect world your plan is the best. The whole system is too entrenched.
When I was a kid, you paid as you go as a rule and that worked OK. The thing is government and insurance has allowed everyone involved in our health-care to raise the price again, and again.
I went to the a hospital without insurance, they charged me 2-3 times as much as they would an insurance company. You need it or they screw you.
@TheDustball:
@Megalomania:
I agree with TheDustball. Given the fairly transparent nature of taxation these days, it would become plainly obvious if they were being taxed discriminatorily. I think the slippery slope argument is pretty weak, and it's raised as a general defense against church taxation because there is no good reason not to tax them. Tax them like a corporation; the ones who don't make much money don't pay much in taxes; the ones that rake in multi-millions per year pay more in taxes, just like every other business. They'll be entitled to deductions and credits just like everyone else. Fair and equitable.
@I Love New Jersey: Totally agree. Let's fix wellfare abuse and put that money toward health care. My taxes are already high enough, thanks.
@frank64: He also said that he was going to take public financing for his campaign, so I don't think he is too averse to "changing his mind."
@TheDustball: Funny how everyone always spews "separation of church and state" on every single issue they can, and then when it comes to putting their greedy little paws on donation money they aren't so separatist any more.
@WraithSama: Yay, totally agree! I almost don't care any more who's spending it all, it just has to stop.
@HiPwr:
Because the government provided plan sucks?
This is coming from a Canadian who finds that almost every employer here includes a health plan.
mccain also talked about doing this during the election, which was one of the things i didn't like about him. nothing like taking barely affordable plans and making them even more expensive - maybe we could reduce the number of insured even more.