Posted on 01/20/2007 8:18:47 AM PST by PtrainerNYC
BS. Already, good insurance plans hit the 7.5k/15k limit (remember, the part nominally paid for by your employer counts). In a few years, inflation will push any insurance worth having over that limit.
This is just another tax increase.
The idea of treating self-obtained and employer-obtained insurance identically has merit, but should be balanced with spending cuts, not new taxes.
I'd like to visit you in this place where the latter would actually occur, but NASA hasn't yet sponsored a manned expedition to your home planet.
Mister Cratchit, be sure that each lump of coal you burn at your desk has been fully recorded toward your tax liability!
Well wait a minute. There is no evidence of that. And if one doesn't limit the tax free nature of that benefit, how do you want to make this tax cut revenue neutral to limit impact on the deficit?
There is no evidence that health care costs haven't been systematically going up faster than general inflation (assuming the 7.5k/15k is even going to be indexed for the latter, which is a fact not in evidence)?
I've seen less denial of reality in creationism threads.
And if one doesn't limit the tax free nature of that benefit, how do you want to make this tax cut revenue neutral to limit impact on the deficit?
Buckle down and cut wasteful spending elsewhere in the budget.
Can someone explain if this applies to gov't employees plans as well? Or are Congressional and other federal plans exempt?
You are correct. If the threshold is not indexed, inflation will capture more and more employees (and non employees) in the taxability area -- but this is not a difficult concept and we'll have to wait to see the details.
It would seem reasonable to presume the 7500/15000 threshold is in constant dollars. As for HC rising faster than inflation, it is probable that there will be a rosy scenario assumption embraced that a plan like this will in some way slow the price increases.
But if it does not, you're probably being way too paranoid. This subject is now going to be thoroughly focused on by the workforce. If HC inflation (as opposed to general inflation) drives people past the taxability threshold, or is about to, the pressure on legislators would become enormous immediately.
I am noticing that a lot of folks who want to oppose this are doing so because they find holes in it, or an absence of comprehensive address to the entire problem.
My view is that's not its intent. Its intent is strictly and only to create some equivalence of the pretax nature of employee premium payments with the post tax nature of non employee premium payments -- and reality is non-employees are now a majority of the workforce.
Also, I think it has a very very powerful side effect, and that is the Dems want a National Health Care plan with a government agency staffed up to run it. This is the FIRST well advertised manifestation of a Conservative counter to that drumbeat. This is a tax deduction/credit for most people. This is likely going to result in negotiations beginning that will argue over thresholds of income and thresholds of premium payments -- and as soon as that starts the Democrats have lost the ideological war. It will mean the negotiation is over the magnitude of a conservative solution rather than over how many will staff a new agency.
By SHERYL GAY STOLBERG and ROBERT PEAR
__Snip__
In his radio address on Saturday, Mr. Bush described his proposal as a way to “treat health insurance more like home ownership,” giving people tax deductions for their health insurance in much the same way as they get tax deductions for home mortgage interest. He said the current system “unwisely encourages workers to choose overly expensive, gold-plated plans,” driving up the overall cost of coverage and care.
The federal government does without tens of billions of dollars each year in potential tax revenue by making health coverage tax-free. The idea of limiting such tax-free coverage has circulated in various forms for more than two decades and is “quite controversial,” said Dr. Mark B. McClellan, a former White House economist and Medicare administrator, who has consulted with Bush officials on the plan.
“The conventional wisdom is that there would be too much political opposition to propose” such limits, Dr. McClellan said.
In preparation for the president’s speech, the White House has been shopping the idea around Capitol Hill, trying to sound out lawmakers like Senator Charles E. Grassley of Iowa, the senior Republican on the Senate Finance Committee, and Senator Ron Wyden, Democrat of Oregon.
The administration official said Mr. Wyden’s plan contained tax provisions similar to the one proposed by the president. But in an interview, Mr. Wyden was skeptical. He said any tax changes must be coupled with regulations that would encourage private insurance companies to offer affordable coverage to people with pre-existing health conditions.
“The market is broken,” Mr. Wyden said. “Private insurance companies cherry-pick. They’re trying to take just healthy people and send fragile people over to government programs more fragile than they are, and I’m not sure what this does to fix the broken market.”
The Census Bureau estimates that 175 million Americans obtain private health insurance through employers, while 27 million people are covered by insurance bought outside the workplace. The rest, with the exception of the 47 million uninsured, are covered through government programs like Medicare and Medicaid and military health care.
Under Mr. Bush’s proposal, people buying health insurance on their own would receive a tax break similar to the one that has historically been available to people who receive coverage through their jobs. The plan is tied to the average cost of family health coverage, which is currently $11,500 a year.
It would work like this: The administration would cap the amount of benefits that can remain tax free at $15,000 for a family and $7,500 for an individual. Anyone whose health insurance cost more than that would pay taxes on the difference. For example, a family with coverage costing $16,000 a year would pay taxes on $1,000.
The cap would also be used to establish the amount of the new deduction for people who lack coverage. In this example, a family buying insurance on its own could take a $15,000 deduction — even if the insurance cost less. The cap would rise with some measure of overall inflation, but would not necessarily keep pace with the costs of medical care and health insurance.
A White House official, speaking on condition of anonymity so as not to upstage the president, said, “The vast majority of people with employer-provided coverage will benefit as well.”
One of the nation’s leading experts on tax policy, C. Eugene Steuerle, a Treasury official in the Reagan administration who is now a senior fellow at the Urban Institute, said the proposal “would probably help increase the number of people with health insurance at no cost to the budget.”
The administration official said the White House envisioned health insurance companies offering new plans to meet a growing market. But employers expressed doubts.
“This is a classic case of robbing Peter to help Paul pay for coverage,” said E. Neil Trautwein, a vice president of the National Retail Federation, which represents retailers of all sizes. “I do not think the president will find many backers in the employer community for this proposal.”
In trying to address the problems of the uninsured, Mr. Trautwein said, “we should not start by endangering coverage for people who already have it.”
The year was 1986, Ronald Reagan was the President, and the top rate was 28%. And that was without even scratching the surface on the really big loopholes, which are the big middle class sacred cows.
This is tax shifting. A tax cut is a cut, whereas this plan, as reported, will cost a lot of people more taxes so others can pay less. The health insurance welfare state.
We elected a Democrat President with an R after his name. I've defended him on many, many issues during the past 6+ years, but I'm fast reaching the end of that arrangement.
Get back to me on that when Dubya has as much will to cut spending in his entire body as Ronnie had in is left pinky.
I took early retirement and have medical, dental, and vision coverage for life.
As for the idea of taxing superb health coverage, that generally will focus on senior executives
Of the 10,000 employees who took early retirement with me, we all have the same superb health coverage for which we will now be taxed. I'm getting as sick of this President as my liberal Democrat friends.
I think you need not get sick, because your employer will be gutting this supposed retiree health plan along with your pension inflation adjustments quite soon.
That's not being vicious. That's just acknowledging the inevitable. The precedent is set by the airlines and IBM and Citigroup have signed on.
You're on borrowed time.
Fortunately, I opted to take my pension at age 52 as a lump sum instead of an annuity, and I invested it well at a good time in the stock market. A cliche somtehing like "a bird in the hand ..." comes to mind. Now, if I can just live long enough to qualify for Medicare ...
Well this is a load of crap.
Well done. Keep an eye on the medical coverage. That's always at risk.
Good luck.
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