SOTU Healthcare
 

Bush made reference in his speech to a tax-based effort to reform health care. So far as I can tell, the plan has two components:
-Inclusion of employer-purchased insurance in income
-A standard deduction of $7500 for health insurance.

The first part is, I think, excellent policy. This income exclusion is absurd from a theoretical perspective, and from a policy perspective, all it does is subsidize extravagant healthcare spending for those who don't need it. In addition, it really makes people dependent on their employers for health insurance.

The second point seems just as dumb. The point of a deduction is completely lost if it's unmoored from the activity it's supposed to incentivize. If you receive a $7500 deduction without regard to your actual spending, it doesn't affect your incentives at all. A much better system would be to make health insurance deductible up to $7500 (or more).

Of course, needed as this reform is, it doesn't really address the structural problems of health insurance. In particular, decoupling health insurance from employment creates a potentially severe adverse selection problem. I'm not sure I really see a way out of this, apart from universal gov't-provided insurance or giving insurance cos. carte blanche to set rates individually, neither of which seems like a desirable outcome. Anyone else have thoughts on the President's plan or HC in general?

Re: SOTU Healthcare
 

Apparently people who get Health Care thru Employers would lose some money as it would then be taxable income. Makes a bad plan even worse.

Re: SOTU Healthcare
 

[ QUOTE ]
Apparently people who get Health Care thru Employers would lose some money as it would then be taxable income. Makes a bad plan even worse.

[/ QUOTE ]

Did you miss this part?

-A standard deduction of $7500 for health insurance.

Although if you are getting more than $7500 of a benefit from your employer, you could be worse off.

Re: SOTU Healthcare
 

Foolish Americans. Canada has had this figured out for decades: socialize health care and provide universal coverage fully funded by a 2% hockey-ticket tax.

Re: SOTU Healthcare
 

[ QUOTE ]
[ QUOTE ]
Apparently people who get Health Care thru Employers would lose some money as it would then be taxable income. Makes a bad plan even worse.

[/ QUOTE ]

Did you miss this part?

-A standard deduction of $7500 for health insurance.

Although if you are getting more than $7500 of a benefit from your employer, you could be worse off.

[/ QUOTE ]

Apparently the people who get Health care thru employers do not get the credit.

Re: SOTU Healthcare
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Apparently people who get Health Care thru Employers would lose some money as it would then be taxable income. Makes a bad plan even worse.

[/ QUOTE ]

Did you miss this part?

-A standard deduction of $7500 for health insurance.

Although if you are getting more than $7500 of a benefit from your employer, you could be worse off.

[/ QUOTE ]

Apparently the people who get Health care thru employers do not get the credit.

[/ QUOTE ]

http://www.whitehouse.gov/news/relea...0070122-9.html

This white house description implies otherwise.

Re: SOTU Healthcare
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Apparently people who get Health Care thru Employers would lose some money as it would then be taxable income. Makes a bad plan even worse.

[/ QUOTE ]

Did you miss this part?

-A standard deduction of $7500 for health insurance.

Although if you are getting more than $7500 of a benefit from your employer, you could be worse off.

[/ QUOTE ]

Apparently the people who get Health care thru employers do not get the credit.

[/ QUOTE ]

http://www.whitehouse.gov/news/relea...0070122-9.html

This white house description implies otherwise.

[/ QUOTE ]

Be quiet with those facts. Republican = Evil, Democratic = Good. You don't need to learn anything before you try to spin it.

Re: SOTU Healthcare
 

[ QUOTE ]
Foolish Americans. Canada has had this figured out for decades: socialize health care and provide universal coverage fully funded by a 2% hockey-ticket tax.

[/ QUOTE ]

I'm not sure a 2% hockey ticket tax could provide health care coverage for the state of Wyoming. Football and baseball... they might be on to something though. I prefer the "anyone but me" tax, though.

Re: SOTU Healthcare
 

[ QUOTE ]
Apparently people who get Health Care thru Employers would lose some money as it would then be taxable income. Makes a bad plan even worse.

[/ QUOTE ]

Although I don't think this is an accurate representation of the plan, I'm not sure it's a bad thing. The exclusion of health care benefits from income doesn't make much sense. If you think the government should be subsidizing health care, then it should do so across the board, not just for employer-provided insurance.

Re: SOTU Healthcare
 

[ QUOTE ]
If you think the government should be subsidizing health care, then it should do so across the board, not just for employer-provided insurance.

[/ QUOTE ]
I agree with this. The employer based health care system in this country really leaves people up a creek if they are unemployed or have a stingy employer.

The problem is that Bush is proposing a deduction instead of a credit. This doesn't help the poor because the cost of health care is much larger than their tax burden. On top of this, employers are less likely to offer insurance to employees if one of the incentives to do so (not counting against income) is removed. To be honest, I don't understand what problem Bush is trying to solve with his plan.