Health Care BS

Comments 3

1. Bill Jempty wrote:

   Lets do some math

   Average cost of family health insurance premiums is 12,000 a year approximately, 8,800 is paid by the employee.

   The basis for those figures I’m using comes from here.

   http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=47450

   Say the employee gets his own family insurance after the McCain proposal. Its cost- 10,000

   A family in the 25% tax bracket will now pay 2,200 for what was non-taxable.

   Then an extra $1,200 in increased insurance premiums.

   That 8,800 is now subject to SS and medicare taxes. That’s another 673

   State income taxes, I’m only guessing because Florida has no such tax. Say 3% on the 8,800. That’s 260 a year.

   I have the figured tax savings at $673. Then remember insurance premiums increase on average 5% a year. That figure will erode and eventually become a tax increase. Congress can make adjustments, but since have they adjusted the Alt. Minimum tax or the maximum amount of capitol losses allowed in a calendar year.

   BTW what about the SS tax increase employers will have to undergo because of how the taxability is changed. They will have to pay an average of $673 on every employee whose benefits are now taxable. For a big corporation, that will add up fast. Will some drop employee health plans as a result?

   That will leave some people with chronic medical conditions paying through the nose for insurance, if they can get it at all. Obama’s tens of millions may be off, but millions will be paying more as a result of McCain’s tax proposal. BTW I am skeptical of any such reform, not with a Democratic congress.

   Bill

   Posted 18 Sep 2008 at 7:58 pm ¶
2. Catron wrote:

   I appreciate your comments, Bill, but I do take issue with some your facts and assumptions.

   For starters, on the amount paid by the employee, your $8,800 figure is refuted by your own link. The KFF policy report clearly says, “Annual premiums for family coverage averaged $12,106 in 2007, with employees on average paying 28% of the cost, or $3,281.”

   Using your own 25% hypothetical tax rate, the increased federal tax burden on the $3,281 would be $820, and it is by no means clear that your assumptions concerning SS, Medicare, and state taxes are valid. After this thing winds its way through Congress, it is more than likely (as the guy from the Tax Policy Center indicated) that the average employee would probably wind up with a net decrease in his tax liability.

   Your argument also assumes that health insurance premiums will remain at current levels or increase. But if McCain’s proposed reforms relating to benefit mandates and interstate purchase of health policies are inacted, premiums will almost certainly drop precipitously.

   As to the people with chronic medical conditions, this is something a red herring for purposes of the tax discussion, but McCain’s plan (and legislation recently put forward by Rep. Jeff Fortenberry) would bolster state-run high risk pools that will largely resolve that problem.

   Posted 18 Sep 2008 at 9:30 pm ¶
3. Matt Horn wrote:

   Hi Catron, I have to agree with most of the assertions put forth by Bill. I don’t think the wholesale conversion proposed by McCain is a viable option. That said, there are some good reforms in his package that I would like to see implemented. As it stands his proposal would only work if we federalize insurance departments into a national agency. That alone scares the bejeesus out of me. While I agree that the numbers are a little skewed, his analysis is sound, and I think we would see the negative impact fairly quickly.

   Of course, the Obama plan is a bad move as well, but we all know that.

   Posted 19 Sep 2008 at 9:02 am ¶

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