US health care

[Bill Peckham]

dang ... double post

[Bill Peckham]

Nice cariad. One quibble you need work credits when you reach 65 too. If you ever want to blog dialysis reimbursement you'd be welcome on DSEN.

Thanks, Bill, I'm enormously flattered. I am not back on dialysis, and have a 2nd transplant scheduled for March, but if you ever need a strongly worded opinion piece on transplant, I do believe I'm your gal. Work credits even at 65? Man, it's even worse than I thought.

Kimcanada, monrein, thank you for your insight. Yes, the emotional toll can be immense, having to work up the courage and the self-esteem to advocate for yourself while ill is beyond the abilities of many people. I also imagine that it is no picnic for the providers. I have seen my GP - a lovely man, and my favorite doctor - turn people away for lack of a co-pay or cash to pay upfront. My GP is certainly cheaper than an ER, and will be able to deliver much better service, but he also occupies the bottom income rung for physicians and has to look after his own practice.

USA will not turn you away, and there are ways to get amounts lowered or even written off in full.  Drug companies will help you with medications, as well.

I couldn't disagree with this statement more. I guess it depends on what you place under the "health care" umbrella, but I have heard of plenty of people turned away, especially with severe mental health issues. I have said this before, but in my decades of post-transplant life, I have had all but zero success getting help with prescription drugs.

Having medical bills written off on your record affects all aspects of your financial life - ability to get loans, sometimes even ability to get jobs. I went to UW-Madison in 2002 for an appointment with a transplant nephrologist, after two separate calls to my insurance to make sure I was covered there. The reps said yes, absolutely. This was before those messages warning "even if the rep says you're covered, we might just surprise you." Well, United Healthcare took so long to process the claim, that I ended up going a second time 6 months later before getting a letter in the mail from the hospital saying "you were never covered here, and you now owe us $5000 for your two visits". We appealed it to the ends of the earth, finally were forced to settle for $3000, and it went on my husband's credit report as a settlement, since the insurance was group through his work. It is only now falling off his record.

Murf, Bassman is right, it is impossible to discuss this without a political argument springing up. There are people here who work just as hard as anyone else, cannot get or afford insurance, pay taxes which include taxes for Medicare, pay toward the salaries of government employees (who almost always have excellent coverage) and then are allowed to fall into bankruptcy or worse when they need medical care. It is very political and very personal.

I was talking about the ER mainly.  I didn't even think as deedp as mental health.  You're right.  You may sit in the ER for hours, but you will eventually be seen.  Good or bad.  That's why most people with no insurance go to the ER for a cold and those with insurance pay for it. 
But you are right, Cariad.

Not all ERs are equal but this emergency room entitlement get's you stabilized not treated. If you have cancer, your cancer isn't going to be treated in the ER. If you're bleeding they'll stop the bleeding but there is a huge difference between being stabilized and being treated.

[BigSky]

The problem is people wanted reform and this bill was not reform.

Instead it was 1000's of pages that was loaded with legal mumbo jumbo that was wide open to interruption down the road instead of being specific.

The idea of taxing people health care benefits was probably one of the most harmful things to come up in the whole thing.

They should have did a single payer system (something Baucus refused to even be truly heard) and also eliminated earned income credit.  Use that money that is given out in earned income credit towards health care instead.

Why not tax health benefits? I know my union insurance would be good enough that it would result in some tax but why not? They tax everything else provided through work - why not insurance? It's all pay to me.

That is kinda like saying they should tax medicare and medicaid benefits. 

[Sunny]

I wish we could have single payer health care in the U.S.. That way we all get insurance and we can all sleep soundly at night.
The Insurance companies always get their way because they have huge amounts of money to pay for Lobbyists whose sole job is to go to Washington and buy off politicians. Our politicians aren't even listening to us anymore as is evident in the fact Obama's Health plan ideas will be defeated after being watered down so much nobody is happy about it anymore. An American politician's only thought is toward $ for their next election so they can stay in office. They know where that $ comes from. (Don't even get me started on the Supreme Court decision this week which basically allows unlimited donations to politicians from corporations and groups). American health care is run by Big Corporations. If the people truly had the choice, I think most Americans would agree every American is entitled to medical coverage. The question is regarding how to implement a program.

[Malibu]

If insurance weren't a player in healthcare it would be affordable.  Insurance (Companies) are the main culprit of our obscenely high priced medical care.

[kimcanada]

I wonder what the percentage of people is that want health reform and the percentage against. A true number tho, and I think when you have people one one side of the other you never get a true #

[Bill Peckham]

The problem is people wanted reform and this bill was not reform.

Instead it was 1000's of pages that was loaded with legal mumbo jumbo that was wide open to interruption down the road instead of being specific.

The idea of taxing people health care benefits was probably one of the most harmful things to come up in the whole thing.

They should have did a single payer system (something Baucus refused to even be truly heard) and also eliminated earned income credit.  Use that money that is given out in earned income credit towards health care instead.

Why not tax health benefits? I know my union insurance would be good enough that it would result in some tax but why not? They tax everything else provided through work - why not insurance? It's all pay to me.

That is kinda like saying they should tax medicare and medicaid benefits.

Medicare is funded by employment taxes (and premiums) - Medicaid isn't tied to employment. Why is receiving $2,000 a month in insurance benefits - company paid premiums - different from receiving a car and driver for personal use?(see Tom Daschle) Or a $24,000 year end bonus?

[brmoore]

   I really believe the biggest cause for our medical costs is waste and the fact that our Government doesn't do anything
to remedy this problem.
   Here is a prime example - I have been getting certain appliances (ostomy) through a gov't. approved provider for thirty some
years. A few months ago I ran out and had to purchase these appliances on my own. I went to a local surgical supply house who
charged me $23 per box. I noticed that my gov't provider was charging the Government $129 for the same box. I called every
government agency as well as my Congressman and Representative to alert them about the outrages prices they were paying.
I got nowhere - no one wanted to be bothered, nor did they care.
    For fun I called the Gov't provider and asked them how they could charge the Gov't $129 for something I could buy for $23.
Their answer was that they had the additional cost of shipping the product to me. The shipping I found out was a flat UPS cost of
$6 - so much for that.
     Multiply this example by many thousands to see the effect waste has on our health system. Why isn't this problem addressed ?
I assume the answer to that is someone is making a lot of extra bucks.
                                                                                                 Bruce
                             

[BigSky]

Medicare is funded by employment taxes (and premiums) - Medicaid isn't tied to employment. Why is receiving $2,000 a month in insurance benefits - company paid premiums - different from receiving a car and driver for personal use?(see Tom Daschle) Or a $24,000 year end bonus?

Receiving $2,000 in government insurance benefits is no different than receiving it via the private sector.  Fact is it doesnt matter if its tied to employment or not as people can work and receive medicare and medicaid.

[Bill Peckham]

Medicare is funded by employment taxes (and premiums) - Medicaid isn't tied to employment. Why is receiving $2,000 a month in insurance benefits - company paid premiums - different from receiving a car and driver for personal use?(see Tom Daschle) Or a $24,000 year end bonus?

Receiving $2,000 in government insurance benefits is no different than receiving it via the private sector.  Fact is it doesnt matter if its tied to employment or not as people can work and receive medicare and medicaid.

I think you're confusing premiums and benefits. Under the Senate bill premiums were going to be subject to tax, not benifits. If my employer, as part of my employment, paid my Medicare premiums - or my FICA obligation for that matter - why not treat it as income like everything else I'm paid (although Medicare premiums would be below any threshold being discussed in Congress).

My employer is writing a check to an insurance  company on my behalf. They don't write the check unless I work. That sounds like pay to me. Why shouldn't it be taxed? How is that different than if they write the check to me and I pay the insurance? If they paid my mortgage would that be nontaxable income? - I don't think so. Why should health insurance be some special category of benefit?

[Malibu]

Because it cost so dang much! 

...kidding...

Speaking from an until-now self employed person, we pay too much dang taxes anyway!  IF they made that taxable too employers would have to pay EVEN more.  The 6.2 and 1.45, not to mention the state and the federal unemployment ATE MY LUNCH buddy.

[KarenInWA]

Also, if medical benefits get taxed, those who are young and healthy willl say "screw this!" and opt out of their employer's benefit plan.  This leaves only those who need it on it, and as such, the premiums for those existing members will continue to rise, since there are no longer the healthy ones in the pool who "pay" premiums but never or rarely use it.  Over time (and in some cases, it may not take much tme) the employer will either have to charge the employees higher premiums for their insurance, or drop it altogether.  This would then leave many people with pre-existing conditions and histories scrambling for health coverage that will either deny them, or charge them so much they may have to sell everything and live in their car.  Until we get some real health care reform happening in this country, without special deals to special states, this is, unfortunately, the state of healthcare and how it is paid in this country. 

KarenInWA

[Bill Peckham]

Because it cost so dang much! 

...kidding...

Speaking from an until-now self employed person, we pay too much dang taxes anyway!  IF they made that taxable too employers would have to pay EVEN more.  The 6.2 and 1.45, not to mention the state and the federal unemployment ATE MY LUNCH buddy.

Sure but income is income. When you exclude some part of the pie from taxation that part grows. One reason driving the escalating cost of insurance is that it is paid outside of regular salary taxation.

People don't see the money spent on insurance premiums on their behalf as potential income, in part because it isn't treated as income by the IRS. If it was all taxed maybe people would prefer cheaper high deductible plans - that would be good.

If iPods were untaxed income everyone would have really nice iPods but that isn't a good role for the tax system.

Karen the Senate bill had the mandate which was intended to address the situation you describe. If young people opted into cheaper high deductible plans - healthcare savings accounts that would be appropriate and save the system money.

[murf]

I just have to say: the more I read, the less I understand. 

[Malibu]

So Bill, are you saying that in your opinion one of the reasons health insurance costs so much is that it is tax free? 

[Bill Peckham]

So Bill, are you saying that in your opinion one of the reasons health insurance costs so much is that it is tax free?

Yes. BTW people who are self employed don't have the same tax break. They can't deduct limitless insurance costs from their taxable income. There are tax credits and complicated tax rules but the net is not the same - large businesses and people who work for large businesses get more of a tax incentive.

I'm someone who thinks tax policy is a bad way to implement public policy. We'd be better off if we had an efficient and uncomplicated tax system and used public policy to achieve public policy goals. The mortgage intrerest deduction is another one that is extremely politically popular but is bad public policy. Distortions caused by taxes always carry a price.

[BigSky]

I think you're confusing premiums and benefits. Under the Senate bill premiums were going to be subject to tax, not benifits. If my employer, as part of my employment, paid my Medicare premiums - or my FICA obligation for that matter - why not treat it as income like everything else I'm paid (although Medicare premiums would be below any threshold being discussed in Congress).

My employer is writing a check to an insurance  company on my behalf. They don't write the check unless I work. That sounds like pay to me. Why shouldn't it be taxed? How is that different than if they write the check to me and I pay the insurance? If they paid my mortgage would that be nontaxable income? - I don't think so. Why should health insurance be some special category of benefit?

There is no confusion. 

What you say is no different for medicare. 

Employers pay half of social security you owe and half of medicare you owe.  They are writing a check to the government on your behalf.  They dont write the check unless you work.  You benefit from it, they do not.

Why not tax medicaid.  Anything of value given can be taxed.  Why not  something worth several thousand dollars a year.

[Bill Peckham]

I think you're confusing premiums and benefits. Under the Senate bill premiums were going to be subject to tax, not benifits. If my employer, as part of my employment, paid my Medicare premiums - or my FICA obligation for that matter - why not treat it as income like everything else I'm paid (although Medicare premiums would be below any threshold being discussed in Congress).

My employer is writing a check to an insurance  company on my behalf. They don't write the check unless I work. That sounds like pay to me. Why shouldn't it be taxed? How is that different than if they write the check to me and I pay the insurance? If they paid my mortgage would that be nontaxable income? - I don't think so. Why should health insurance be some special category of benefit?

There is no confusion. 

What you say is no different for medicare. 

Employers pay half of social security you owe and half of medicare you owe.  They are writing a check to the government on your behalf.  They dont write the check unless you work.  You benefit from it, they do not.

Why not tax medicaid.  Anything of value given can be taxed.  Why not  something worth several thousand dollars a year.

FICA isn't quite the same as Medicare premiums - FICA and Medicare premiums are independent of each other - but it is an interesting example. FICA is a withhold, you see your gross pay and then you see that FICA was taken out of your pay. Employers match what you pay but everone knows about FICA and how much it is costing them each month. Compare that to insurance through work.

There isn't a line below your gross pay that shows what your insurance premium was the previous month. The sort of high end plans the Senate Bill would tax are the ones that cost $500 or more a week. That would get people's attention if the $500 showed up on their pay stub, was taxed as pay and then deducted. I don't think as many people would have sky's the limit insurance plans if they knew what they cost and could pocket money not spent on these high end policies.

What you'd expect is that employers would provide insurance up to whatever threshold was taxed and beyond that people could top off the plan with their after tax income but the good thing about this is that people would begin to pay attention to what their insurance is costing and would act to keep the cost down if they received the benefit of their actions.

I'm not sure what you're trying to say about FICA and Medicaid. If you have Part B you owe premiums, that's not the FICA tax that employers withhold. The FICA tax is prepaying insurance or qualifying you to buy Medicare. Paying FICA isn't a benefit in the same sense paying your insurance premium is a benefit. There are people paying FICA while they also pay Medicare Part B but I and people like me are the exception. If you're below the age threshold and you get cancer you can't decide to use Medicare, even if you've been paying FICA for 20 years. But you should be able to immediately use your employer paid insurance.

Medicaid is need based, as is all public assistance. Taxing public assistance doesn't make sense. You can't get blood from a rock but it is true SSDI, food stamps, et al are income of a sort. Sure ... If it amounted to more than $30,000 a year for an individual it should be taxed. It doesn't, so it isn't.

[RichardMEL]

Murf mate I think this means that we should never bash our medicare again because we get a bloody good deal!!!!

[Malibu]

bigsky -- employers do not pay half of the ss and mc you owe.......they MATCH what you pay.  Whatever you pay they have to pay the exact same thing. 

Bill, there are a goodly number of people who are self employed, especially here in the South.  That cuts out a huge chunk of your reasoning on insurance costs being high because it is tax free.  And what about the numbers of people who do not have health insurance?  That is another huge chunk.  I just don't by that.  And I do think that people know exactly what their insurance costs.  Unless you are referring to the folks who have their premiums totally paid by their company.  There are not that many of those left around here. 

[BigSky]

FICA isn't quite the same as Medicare premiums - FICA and Medicare premiums are independent of each other - but it is an interesting example. FICA is a withhold, you see your gross pay and then you see that FICA was taken out of your pay. Employers match what you pay but everone knows about FICA and how much it is costing them each month. Compare that to insurance through work.

There isn't a line below your gross pay that shows what your insurance premium was the previous month. The sort of high end plans the Senate Bill would tax are the ones that cost $500 or more a week. That would get people's attention if the $500 showed up on their pay stub, was taxed as pay and then deducted. I don't think as many people would have sky's the limit insurance plans if they knew what they cost and could pocket money not spent on these high end policies.

What you'd expect is that employers would provide insurance up to whatever threshold was taxed and beyond that people could top off the plan with their after tax income but the good thing about this is that people would begin to pay attention to what their insurance is costing and would act to keep the cost down if they received the benefit of their actions.

I'm not sure what you're trying to say about FICA and Medicaid. If you have Part B you owe premiums, that's not the FICA tax that employers withhold. The FICA tax is prepaying insurance or qualifying you to buy Medicare. Paying FICA isn't a benefit in the same sense paying your insurance premium is a benefit. There are people paying FICA while they also pay Medicare Part B but I and people like me are the exception. If you're below the age threshold and you get cancer you can't decide to use Medicare, even if you've been paying FICA for 20 years. But you should be able to immediately use your employer paid insurance.

Medicaid is need based, as is all public assistance. Taxing public assistance doesn't make sense. You can't get blood from a rock but it is true SSDI, food stamps, et al are income of a sort. Sure ... If it amounted to more than $30,000 a year for an individual it should be taxed. It doesn't, so it isn't.

They are the same.  The employer is paying a fixed premium of 1.45% of la lifetime of wages earned with them to medicare that will directly benefit the employee.  Its all benefits that are not taxed.  This is no different than insurance where employers contributed to it.   The fact that private insurance benefits may be used sooner in most cases makes no difference.   

If your employer doesnt list what was contributed to insurance that would be their accounting methods.

The perk of working is that you have the right to have a higher standard of living than those who do not work. 

bigsky -- employers do not pay half of the ss and mc you owe.......they MATCH what you pay.  Whatever you pay they have to pay the exact same thing. 

Its called a match but in reality its not.  All employers reduce wages for the position to make up for the amount that has to be matched.  So in the end its actually coming out of the employees pockets. 

[Malibu]

That is not true bigsky.  I've just closed my company in December, we were an employer who had up to 35 emplyees and we did not lower their pay to cover our portion of taxes.  We did not punish people for what was our obligation.  And frankly that attitude is what is injuring America today.  Cheat everyone out of every thing you can just to make a buck for yourself.  My goodness bigsky, there are SO many taxes that company's pay, one would have their pay cut in half just to pay all of them.  Not only did I pay school and municipal tax at home but I had to pay it for my company as well and I couldn't even vote on the issues in that area!  STate unemployment, Federal unemployment, Franchise tax, I could go on and on and on and on....and on.  The person who has not been self employed (with employees) does not realize how much in taxes a company pays.  This is the problem of new administrations coming in and raising taxes for companies -- which is why some people get layed off.  OK, I'm finished with the hijacking...back to the subject at hand.

Hmmmmmm, sounds a lot like insurance co's!

I agree with Bill on the efficient and uncomplicated tax system.  This would make everyones lives much easier.  The mortgage interest deduction has eluded me as well; I am undecided though on if I like it or not. 

One thing for certain, if we don't get this healthcare thing worked out we are going to be in a world of trouble real soon.

[BigSky]

Actually it is true.  That is  because it represents money which otherwise most likely would have been paid to the employee.   Like anything for a business it affects the bottom line which in turn affects what amount of wages will be paid at that business.

While its true business pays taxes, they also push an awful lot of their expenses onto society to pay.  What enables a business to do business is the passing of those expenses to the taxpaying public in general.

I.E.  The airline industry would not exist without the costs of running airports, FAA, etc etc were not picked up by the taxpayers.

[Malibu]

A business is supposed to be able to do business by selling a quality product not by pushing anything on anybody.

[Bill Peckham]

Here's a simplified look at the difference between what happens today vs. what would happen if health insurance was taxed.

Imagine a company with $1,000 in sales just to illustrate the math not to represent an actual company. This company pays you $100 - that's your salary. In addition it pays a $25 employer group  insurance premium so you have employer group health insurance. You pay $5 in FICA and the company matches that paying $5 too. The cost of employing you is $130 from the employer's perspective, their taxable income is $870. Your taxable income is $95.

Now we change the law and we tax health insurance - the cost to the company is the same and their taxable income remains the same but your taxable income is $120 - your $100 base salary and the $25 employer group  insurance premium less FICA which is still $5.

Assume the tax rate is 20%. In the first instance you are getting $25 worth of employer group health insurance, paying $5 in FICA and $19 taxes. In the second instance you are getting $25 worth of employer group health insurance, paing $5 in FICA and $24 in taxes.

Obviously you are paying more taxes - that sucks for you - but back to the original question: why should the money being paid to you in the form of health insurance not get taxed?

The difference isn't just that the $25 is on your pay stub it is that the $25 is taxed as normal wages. What's the argument for excluding it? We all have predictable expenses - if the company pays your country club membership that's income and is taxed as normal wages. If you're provided a car and driver that's income - you owe taxes based on its fair market value. There are all sorts of tax loopholes but the general point is that if you are given something of value that you use outside of work - that's your income and you owe taxes. That's true for everything except health insurance.

Making this change isn't the singular fix needed for the health system but it raises money which we need. The fixes have to generate savings to the public cofers. You can't fix the healthcare system without fixing the inefficiencies and distortions - one of several is this idea that insurance benefits should be uniquely sheltered from tax.

You can see that under the current system employer group insurance premiums are treated differently than FICA by the IRS. Medicare premiums never even enter into the discussion. FICA is a tax that coveys some benefit but that is true of every tax and taxes are a category different from paying a fee for a service. Medicare Part B and Part D premiums are fees for service - you earn the benefit of being able to buy this inexpensive insurance because you paid taxes when you were working to support people who were retired. You paid FICA, so you are allowed to enroll in Medicare and pay Medicare premiums - being allowed to paying Medicare premiums is an earned benefit.

Malibu there is no one fix that is going to address all elements of this problem. According to the US census (http://www.census.gov/prod/2008pubs/p60-235.pdf) the percentage of people covered "by private health insurance was 67.5 percent, down from 67.9 percent in 2006 (Figure 7). The percentage of people covered by employment-based health insurance decreased to 59.3 in 2007 from 59.7 percent in 2006. The number of people covered by employment-based health insurance, 177.4 million, was not statistically different from 2006." So 7.8% were self pay, that's a lot of people but the nearly 60% is the bigger problem. There's 20 some percent covered by government insurance plans - Medicare, Veterans, Medicaid.

I don't know what percent of that 60% with employer group plans would have been subject to tax under the Senate bill - I think it was less than a quarter but I can't seem to Google up a number right now. Right now there isn't any sort of ceiling on health insurance costs, and without something checking unlimited growth these high end policies are dragging the premiums for the rest of the 60% higher and higher.