SOTU Healthcare

[bobman0330]

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?

[4 High]

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.

[TomCollins]

[ 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.

[4 High]

[ 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.

[bobman0330]

[ 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.

[TomCollins]

[ 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.

[bobman0330]

[ 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.

[iron81]

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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.

[hmkpoker]

[ QUOTE ]
To be honest, I don't understand what problem Bush is trying to solve with his plan.

[/ QUOTE ]

The same problem all insurance regulations try to solve: the insurance companies aren't making enough money. I got health insurance in NJ for a little less than $200/month on a PPO plan through NJBCBS. It was about the simplest plan they offered, covering me for serious emergencies. High deductibles, no chiropractic, etc. Before that I was on my empolyer's health plan, which was a "bargain" at $350-$400 month, and covered me for all kinds of crazy stuff that frankly I didn't need at all. The employer's incentive (like most employers) was to provide as much health insurance as possible for the tax deductible. All the employers start doing this, and voila, everyone is forced to buy more health insurance than they need, and the insurance companies laugh all the way to the bank with their government-created cartel.

[mosdef]

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.