Monday

Healthcare for all; just pray you don't need it.



In the battle to insure the uninsured the real losers are those among us who are already insured. In an unusually insightful peace MSNBC seems to get it right for a change. I’m not hopeful that the trend will continue but as the saying goes; “even a broken clock is right twice a day”.

The following article from MSNBC points out some of the likely problems faced in the race to socialized universal healthcare (excerpts from article appear in bold):

Health insurance ‘haves’ to pay for ‘have-nots’?
Senate considers curbing tax-free status of employer-provided benefits

The title sums up nicely the real issue at hand; how to pay to insure those who do not have the means to do so themselves. The government answer is to cast itself as Robin Hood and steal from those who have and give to those who have not.

As part of a health insurance reform package now before Congress, some of the 164 million Americans who are covered by employer-provided health plans could be asked to give up at least part of the longstanding tax exemption granted to such compensation.

It’s an idea likely to be met with howls of opposition if it makes it into the final version of health insurance legislation that President Barack Obama is pushing.

The idea of limiting the tax break for employer-provided insurance gained momentum last week, when Obama told senators that he’d consider it as one ingredient of the health insurance reform bill he wants Congress to pass by early August, when the Senate starts a one-month recess.

I think the average citizen would be a little more outraged at this idea if it were called by its true name; a tax increase. Billing it as giving up a tax break obfuscates the reality which is simply that the government intends to take more money from our checks. It is a tax increase and to call it otherwise is disingenuous and misleading.

senate Finance Committee Chairman Sen. Max Baucus, D-Mont., who conveyed Obama’s willingness to consider the idea after a White House meeting Tuesday, has said the tax treatment of employer-provided health insurance ought to be made “fairer and more equitable for everyone.”

What does Baucus mean by that? Fairer and more equitable for whom? It seems to me that those of us who are enjoying our employer provided healthcare are not ready to see benefits lost and costs rise to insure someone else no matter how noble the intention. You do not level the playing field by bringing everyone down a notch. You level the field by bringing everyone up to the same level.

Will you end up with more taxable income?

While details of such an approach are still sketchy, it would likely involve employees paying tax on a percentage of their employer-provided health benefits. So if Congress decided that all such premiums in excess of $11,000 for family plans would be taxable income, and your company paid premiums worth $16,000 for your coverage, you’d have to pay taxes on $5,000.

Obama’s new openness to the idea stands in contrast to what he said six months ago as a presidential candidate, when he harshly criticized his Republican rival, Sen. John McCain, for proposing that employer-provided benefits should be taxed.

Scolding McCain in their debate on Oct. 15, Obama said, “This is your plan, John. For the first time in history, you will be taxing people's health-care benefits.”

Obama also pledged last year not to raise taxes for families making less than $250,000, and a health benefits tax, depending on how it was structured, could run afoul of that promise.

No taxes on those making under $250,000? This is one of numerous plans that will in fact raise taxes on just about everyone who is paying taxes. This along with cap and trade and other radical energy policies will ensure that no one will escape the ever increasing tax burden Obama and his policies are yoking us with.

The tax exemption on employer-provided health insurance, which dates to 1943, has already survived one attempt to limit it.

An echo of Ronald Reagan

In 1984, President Ronald Reagan floated the idea of requiring workers to pay taxes on employer contributions to their health insurance exceeding $2,100 a year. A Washington Post editorial the following year called the proposal “surprisingly lucrative yet eminently fair,” and speculated that “(it) might have helped hold down health care costs in the bargain.” But opposition, especially from labor unions, scuttled the proposal.

Obama’s new receptivity to the tax springs from the massive sums of money needed to pay for expanding health coverage to the uninsured.

Obama’s Council of Economic Advisors last week cited a figure of about $125 billion a year to insure the uninsured. But the president aims to do more than that. He also wants to subsidize the cost of coverage for lower-income people, subsidize COBRA coverage for those who lost their jobs and make other changes.

MIT economist Jonathan Gruber told the Finance Committee last month that curbing the health insurance tax break was “both the most natural source of financing for health care reform” and “one of the few that is clearly large enough to finance the subsidies needed for reform.”


Stop calling it a tax break! This is my money, our money and they speak about it without even so much as a clue as to how these new taxes will affect people like us. They are taking more and more of our money with various surreptitious and insidious “non-taxes”. Have they forgotten that we are in a recession? Maybe they think it’s only the people that need to scale back and that they are free to spend as if there was a never ending supply of money.

According to the congressional Joint Committee on Taxation, the Treasury misses out on $226 billion a year because employer spending on health insurance isn’t counted as taxable income.

The treasury misses out on all of this money? They just don’t get it. They look at this as a treasure hunter would look at a pristine Egyptian tomb. This is not lost booty waiting to be found by an industrious adventurer; it is the peoples’ money.

That figure dwarfs any other potential health-related revenue sources that have been identified as possibilities to help fund the health care expansion. Among them are a 3-cent-per-can tax on sugar-sweetened beverages, which the Congressional Budget Office estimates would raise about $50 billion over 10 years, or increasing taxes on beer, wine and distilled liquor which, under one CBO scenario, would raise $60 billion over 10 years.

We should be extremely concerned that our leaders are searching for new and innovative ways to part us from our money. The one thing they are not looking to do is cut wasteful government spending. If they feel that we must have socialized universal healthcare then pay for it by cutting other governmental expenses.

It is common sense. In tough economic times they should be looking to shrink the size of government not expand it to unprecedented proportions.

A boon for upper-income people

According to an analysis by the Joint Committee on Taxation, curbing the tax break for employer-provided health insurance would primarily affect the wealthy, who “receive the greatest tax benefit from the exclusion from income.” According to Gruber, “about three-quarters of these dollars go to the top half of the income distribution.”

Of course no liberal proposal would be complete without at least a passing attempt to engender a little class warfare.

But opposition to the proposal may be as big a problem for Obama as it was for Reagan.

A Kaiser Family Foundation survey in April that asked whether workers “with the most generous health care benefits” should be required to pay taxes on their coverage found 52 percent of respondents opposed to the idea. Of those who currently have employer-sponsored health insurance, 62 percent opposed it. (The poll of 1,203 adults had a margin of error of plus or minus 3 percentage points.)

Will Americans bridle at loss of tax break?

Again with the “loss of a tax break”. It is a TAX, not the loss of a tax break. This mincing of words is the cornerstone of liberal misdirection. If you convince the people that they are not being taxed but simply losing a tax break it becomes more palatable. In the end however the result is the same; we pay more of our hard earned money to the government.

The U.S. Chamber of Commerce warned Baucus in a letter last month that workers view employer-provided insurance “as duly-earned income” that should be “protected from the tax collector. This perception perhaps explains why the president was so successful in campaigning against Senator McCain’s health reform proposal — Americans generally do not support tax increases.”

The American Benefits Council, which represents principally Fortune 500 companies, is also opposed to the idea of limiting the tax break for employer-provided insurance.

“It is likely to lead to higher deductibles or co-pays, so there’s higher cost sharing” by workers, said the group’s health care spokesman, Paul Dennett. If Congress were to set the threshold for taxation of benefits at $13,000 for a family coverage plan, then employers “in order to help workers not face taxation, may offer coverage below that threshold. This is a course employers say they would likely take.”

There is the crux of the problem; in the end we will all see a decline in our available coverage. We will see the loss of certain benefits to ensure that costs come in under the government’s threshold. This is the wrong way to go. Instead of bringing up the least among us we are tearing everyone down to a lower standard.

Reduction in health benefits?

Economist Elise Gould at the liberal think-tank the Economic Policy Institute gave a similar assessment. Employers would see the threshold for taxation as what the government deemed the target level for health benefits, she said. “Employers will respond by reducing the comprehensiveness of benefits. They’ll likely target premiums to fall below the (threshold) value or just at that value, so employees don’t have to pay those additional taxes.”

Well there you go, if a liberal think tank can figure it out it must be obvious.

Corporate America also fears that a limit on the tax break for health insurance would create an administrative nightmare, especially for large firms with employees in different states who face widely varying health care costs.

And opposition also remains strong among labor unions, which were big Obama backers in last year’s election.

Barbara Coufal, the assistant director of legislation at American Federation of State, County, and Municipal Employees, said, “We don’t think we need to look inside the health care system to seek all the revenues we need for health care reform. Over the last 10 years, there have been a lot of tax breaks that have been given to the wealthy and to businesses. We maybe ought to look there and restore some equity.”

Okay, one more feeble attempt on my part to clarify: How is allowing people to keep what the work for inequitable? How is taking what I earn and giving to someone else equitable. This logic can only survive if one suspends disbelief or is delusional to begin with.

With momentum growing to enact some limit on the tax break for health benefits, increasing energy is being devoted to develop a workable taxation scheme.

Target upper-income Americans?


Gruber suggested the possibility of having a baseline so that only families with incomes above $125,000 per year would pay tax on their benefits. Gruber said this would still raise a lot of revenue: more than $40 billion a year if the cap were indexed to increases in the Consumer Price Index.

But in its letter to Baucus, the Chamber of Commerce said that such a proposal might “foster class warfare by (repealing the exclusion) … for certain income earners and not affecting others.”

Baucus, a 30-year Senate veteran, knows the politics of this issue are delicate. Limiting the tax break for employer-provided health benefits has “got to be done in a very sensitive way, to make sure the limits are high enough,” he was quoted as saying last Thursday by the Capitol Hill publication CQ Today.

What Baucus is trying to say is that they have to find a way to simultaneously tax us into oblivion and somehow make us think it’s a good thing. In the end a majority people will find that they have less of their money to spend and healthcare that is far below the standard that they have grown accustomed to.

Yet if Congress changes the law so that the tax bite ends up hitting only the wealthy, it might not raise enough revenue to help pay for health insurance overhaul.

“That’s the real dilemma,” said Dennett, of the American Benefits Council. “The lower the threshold is set, then the lower the revenue gain — and the scramble would be on to find other revenue sources.”

No the real dilemma is that we have allowed our government to become grossly inefficient and corrupt. We have allowed them to solve all of our nation’s woes with increased spending without ever looking to trim away the pork. We the people have allowed this beast to grow to such a size that it now threatens to devour us whole.

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