Tuesday, September 29, 2009

Musings on Health Care Reform

I have been doing a lot of reading on the Health Care Reform Bill and the different options on the table.  Some of the things I've read don't make a whole lot of sense to me logically, fiscally, or even socially.  So I thought I would solicit comments from others on a few points that I've been pondering.

1.  Taxing employer provided health care benefits.

From what I'm reading there are two options on the table:  Taxing all employer provided health care benefits or taxing those health care benefits that are over some average cost.  The number I see provided for statistical purposes is something like $13,000.  That number is what I don't understand.  Looking at what I pay for insurance (my cost and employers cost) it's about one-quarter that amount.  Are we to assume that the $13,000 figure used for the average health care plan includes other family members?  If so, taxing people with more expensive plans (presumably) with families doesn't make a lot of sense.  In fact it flies in the face of existing tax code that provides a deduction for having children and/or dependents.

On the other hand, if we tax all plans it flies in the face of our progressive tax system and places a regressive tax on lower and middle incomes.  You might ask how.  Well, the difference in the cost of the health care plans for low income and the wealthy do not differ that much (presuming they don't have one of those "Cadillac" plans).  Therefore, if the the average cost of the plan is $13,000, that might raise a lower or middle income family's tax burden by 20 or 30% while that increase in taxable income is a much smaller fraction of a wealthy person's AGI.

2.  The idea of a policy of mandatory health insurance

We are all familiar with forms of mandatory insurance.  If you buy a house and have a mortgage, you are required to have fire insurance.  If you drive a car, you are required to have liability insurance.  However, legislators are pondering including a requirement for every person to have insurance.  That is, you must pay to live (beyond food and clothing).  You can choose to own a house or not, and mortgage it or not.  You can also choose to drive a car or not.  This goes hand in hand with another concept...

3.  Not allowing insurance companies to discriminate over preexisting conditions

This policy is useless unless #2 is enforced.  If not, then why would ANYONE buy insurance before they got sick?  If an insurance company can't refuse someone coverage because they are already sick, then once someone got sick, they could buy insurance, and the insurance company would have to pay.  If that happened enough, it would bankrupt any system, public or private.

1 comment:

Soapbox Jill said...

Say, have you looked at Obama's health care plan he just came up with since the one we've all been fighting got shot down? He just won't give it up, like a monster that keeps rising up out of the slime after we thought we had gotten rid of it...
Here's a link on that new thing raising it's ugly head: http://usliberals.about.com/b/2010/02/23/three-reasons-to-not-take-obamas-health-plan-seriously-yet.htm