http://www.dfw.com/mld/dfw/16513010.htm
President Bush will propose deep tax breaks for Americans who purchase their own medical insurance and would finance the plan with an unprecedented tax on a portion of the healthcare plans that workers receive from their employers, according to the White House.

IF the 15000 and under exemption stays, I would have to say that the 80% figure may be true mentioned in the story- I have excellent Union health trust, that provides just a tad under 15K for my yearly benefits, as far as PREMIUMS ONLY is considered- if they don't tax some of the bennies themselves.


Mentions about the health care idea he floated out there last night.

1) Do you think the entire idea is dead on arrival, since the tax seems to hit the middle class only?

2) Do you think it would lower health care premiums as some proponents say?

3) Do you think it woud have the intended effect of more poeple insured or less, and why?

This seems like an exceedingly bad idea. Essentially it will take money from existing payers and use that money to fund non-payers. That smacks of Commun/Socialism. There's a plan doomed to fail in the USA. While it doesn't go as far as Socialized Health Care - it's too close. Coming from a "Conservative" President I feel a trap being built. I suspect this proposal is disingenuous.

If the real goal is to lower Health Premiums then there are far better, cleaner and more direct ways to deal with that than this money shifting scheme.

As for the Middle Class being taxed anew I think that is essentially incorrect. The people most likely to have the types of plans that would be taxed are people in higher tax brackets.

Of course, out of the realm of this discussion, the issue is "Who is the middle class?" If the middle class rises into the 150,000+ range then yes they will be taxed but only if you're stretching Middle Class' range.

1) Do you think the entire idea is dead on arrival, since the tax seems to hit the middle class only?

It's an interesting idea but it is doomed to fail, I believe. As I read it, (1) money paid for insurance through employer plans would be paid pre-tax up to some threshold at which point the remainder would be paid post-tax. And (2) self-employed folks could similarly get tax benefits for buying their own insurance.

I think this plan is designed to disincent people from buying more expensive plans as they will effectively cost more. Those choosing to keep the more expensive plans would be offsetting the loss in revenue from self-employed folks getting a tax break on health insurance.

These two desires are fundamentally at odds. If you want to pay for the loss in revenue with tax breaks for the self-employed, you don't create an incentive for people to leave their high cost plans which would be used to pay for the former. It just doesn't make sense.

2) Do you think it would lower health care premiums as some proponents say?

Possibly. More likely, it will encourage folks to get cheaper plans without as many benefits as the more expensive plans. This may have a negative effect on the overall health of people.

3) Do you think it woud have the intended effect of more poeple insured or less, and why?

Yeah, it might actually do that. But it does it at the cost of lowering the quality of plans for higher-end insurance folks.

Thanks for posting this, and sorry I'm late in arriving to the party. I'd like to point out first that the description of the plan contained in the quote from the article is not entirely accurate, or at least gives an extremely misleading impression. This is not a tax on health plans. It's a removal of income tax breaks that have been given for health plans. The tax is on income, not on what you do with that income.

Anyway, this is an excellent idea, one which I've been advocating for a while now. It would almost certainly lead to a reduction in health care premiums, and I don't think that's seriously disputed. What the concern is is that it would also compromise the quality of care. I disagree. Often times, patients demand from their doctors the most expensive medications they see advertised, because they assume that more expensive means higher quality (when often that is not the case; see the whole fiasco surrounding Vioxx, for example), and because they figure that insurance will pay for it. Also, people whose insurance plans provide insanely low co-pays visit the doctor far more often than they need to, for whatever minor illness, simply because the option is there. It becomes more of a psychological crutch than anything else. But somebody has to pay for it all, and so insurance premiums go sky-high, far out of the ability of the average earner to realisitically pay with his own salary alone.

Now let's just keep in mind what's insurance is supposed to be all about. In any area other than medicine, such as fire, auto, flood, or life insurance, insurance is a way of spreading out risk for things that you can not predict, not expenses that you plan on incurring. Only health insurance has redefined the whole meaning of "insurance" by having it be basically a routine bank account. It would be as if car insurance paid for tune-ups, or home insurance paid for ordinary repairs from wear-and-tear. This is a direct result of the very unnatural intervention by the tax code in the way we run our lives. If health insurance limited itself to the traditionally understood meaning of insurance, the way other types of insurance do, nearly anyone would be able to afford it. I'm quite pleasantly surprised that Bush is calling attention to the very crux of the problem.

While I am certainly in favor of reducing health care costs and the associated tax burden they carry, I have to take issue with this aspect you describe. It is a GOOD thing to get people to go to the doctor early on to diagnose simple problems before they become much bigger issues. Very few people go to the doctor unnecessarily--even were the visit free, the time spent is not. However, reducing the incentive to go early on to get checked out will only lead to people not going to the doctor at all until things have become serious. This will create a much larger cost to the system, not smaller. Any type of major illness can easily run into the thousands or tens of thousands of dollars. You can pay for a LOT of office visits with that. Further, when people don't go to office visits to get checked out, when the symptoms worsen they frequently have to go to the emergency room instead, placing a larger burden on the most over-taxed component of the system, and degrading the care of everyone else there who really did have an emergency.



This is true, and I have described the reason they do that above. Why do you think the have the system set up that way? Insurance companies aren't in the habit of doing things that cost them money...they do this to avoid unnecessary expenses on large ticket items that could have been easily treated if diagnosed early. The same would probably be true in the auto industry in your analogy above. If car companies offered incentives for routine maintenance and periodic checkups, they would avoid many more expensive repairs. The difference is probably that major repairs for autos don't run in the hundreds of thousands of dollars, and the routine maintenance is a much higher percentage of the cost of major repairs, reducing the cost benefit. Plus, they have a built-in out anyway...they don't cover the major repairs if the routine maintenance wasn't done. So, if you think auto warranty coverage is a good analogy, it would carry over to insurance being void for heart patients that were over-weight, didn't exercise, ate fatty foods, etc. Think this country is ready to turn away heart attack victims if it is discovered they didn't take their blood pressure medicine? Actually, that would make an interesting discussion...but I'm pretty sure it's not one you're ever going to hear a politician have.



Companies are already doing this, passing along a higher percentage of the cost of their plans to the worker. So, I'm not really sure that this will have much effect.



So, the goal is to encourage a reduction in health care coverage for the majority of Americans? Or at least have the same coverage cost more? Tell me again what the benefit in this is for me, or the majority of other workers out there who are going to either have lower benefits or have to pay more for the same benefit? I would need to see some hard evidence that this will indeed reduce health care costs. Given that most companies already encourage the very actions this plan is advocating by passing along more of the plan cost to the employee, I'm not sure this would do much but leave people with less coverage, and therefore rising health care costs that must still be born somewhere in the system. What will happen when people do indeed choose lower coverage, but then have health issues that would have been covered but aren't in the new plan they chose? They'll either forego the treatment, or have it and probably be unable to pay for it. So, the system will still have the costs. Workers will just be stuck with more of the burden of them.

I'd dispute this. Though it may well be true that people avoid going to the doctor when they should, it doesn't follow that they don't go to the doctor when they don't really need to. The times they should go to the doctor are for such things as regular check-ups. The times they don't need to are every time they have a sniffle to go down and get antibiotics. What else explains skyrocketing health care costs? Contrary to conventional wisdom, it's not technological advancement, because in every other commercial sector, technological advances have led to decreases in prices, not increases. It's because something's preventing market discipline from working the way it should. Those who incur costs have no incentive to incur them economically, because someone else picks up the tab.

I'm not opposed to insurance covering the types of visits that people really should be having. But something like that wouldn't require the hundreds of dollars a month in premiums that insurance plans require now. A regular check-up, for example, usually wouldn't require any fancy tests or equipment, nor highly trained specialists. The most expensive thing it would require is the doctor's time.

1) Do you think the entire idea is dead on arrival, since the tax seems to hit the middle class only?

Now that I've heard more about it, this might have a chance. I forget the exact figures, but most middle class people would get a tax break because most middle class people don't get the deluxe health insurance deals. Government employees will get hit though, thus encouraging them to go to cheaper health insurance. One that was interviewed in the report I heard on NPR said she might look for a better paying job in the private sector because she figured the deluxe health insurance was part of her compensation.

2) Do you think it would lower health care premiums as some proponents say?

Don't know, would like to see those supporting arguments.

3) Do you think it woud have the intended effect of more poeple insured or less, and why?

Don't know this either. If most people get tax breaks and those with deluxe policies can still afford them while paying taxes on them, it might be a wash.

My impression right now is that this is a plan to lower the expectations of government employees while helping out those who can itemize deductions, basically mortgage holders.

Here's a gray area: My current health insurance is given to me free by the contractor outfit, but my hourly rate is $7.50 lower than the last time I contracted without the free heath insurance (different contracting outfit too). Seems to me that's charging me for the insurance (huh), to the rate of about $1,250 for single coverage per month. This would come under the idea of deluxe coverage, but the coverage is not deluxe at all.

By gosh, it's a big rip-off! Yeah, well it's steady work. Some pay is better than nothing. Lowered expectations, that's what it's all about.

As to why health insurance premiums go up higher than the rate of inflation, it might be due to the rising cost of health care. But then it might have to do with HMOs and the profit motive, or drug companies and the profit motive. Is demand the reason? I don't know, would have to see figures supporting this notion. Perhaps it has to do with illegal aliens jamming up the ERs across the nation. That free health care isn't really free.

I think you touched on the answer with your paragraph below:


So you see the economics of the situation. Your employer isn't "providing" you with health insurance coverage. He's already calculated how much your labor is worth paying for, and so it's pretty much inconsequential to him whether it's payed in direct salary to you or in health insurance. And since he gets tax breaks for the amount he pays in the form of health insurance, that's what he's likely to do. Furthermore, it would logically follow that the greater proportion he pays in the form of health insurance - which basically ends up meaning, the higher the insurance premium - the bigger the tax break.

So these tax breaks are, by the looks of things, encouraging high insurance premiums. That's what Bush is targeting here. I'm glad someone's finally raising the issue, though I'm still a bit disappointed that he merely wants to limit these breaks. I see no reason for keeping them at all, and every reason to do away with them utterly.

According to WSJ you would get a $15,000 tax deduction. If you or your employer pay less you make out. Most who have coverage for 80% would make out very well (most of the middle class). Upper income people make out less well.

It may be too much of a tax break for the Dems since they say they target the ‘rich” but we all know where the big money is – middle class. They will kill it sure as hell.