Bush to float health insurance tax break

yahoo (via AP) ^ | 1/20/2007 | DEB RIECHMANN

[PtrainerNYC]

WASHINGTON - President Bush will propose in his State of the Union address a tax break for people who buy their own health insurance and a limit on how much coverage individuals can receive tax free at work. ADVERTISEMENT

The proposal to be announced Tuesday offers a tax deduction to people who purchase coverage and urges those with generous plans to either embrace cheaper insurance or pay taxes on part of it, according to a Bush administration official familiar with the proposals.

If passed by Congress, the plan would be the first time that workers could get a tax break for buying their own insurance. At the same time, it would be the first time that some employer-provided health care benefits could be taxed.

[PtrainerNYC]

Basically if you dont have health insurance you get a tax break. If your job gives you health insurance you'll pay tax on it to cover the new tax break. Redistribution at its worst!

[CrawDaddyCA]

Can someone explain the difference between Democrats and Republicans again? Lately, I'm having a hard time differentiating between the two.

[EagleUSA]

God help us. Now our compassionate conservative (LMFAO) President is going socialist on us AGAIN. Another move to redistribute the wealth of America. Karl Marx would be proud of such a proposal. Every time we turn around now, Bush is pandering to the socialists.

Oh, yes, read my lips: "No New Taxes"...straight from the Bush legacy.

[flynmudd]

Sub-S employees that own more than 2% of the company already pay Federal and State taxes on health insurance coverage. However, if you own 2% of a company you usually can afford it. I would prefer to pay for my own health insurance because I would get only a major medical policy with a high deductible in conjunction with a Health Savings Account. It would be cheaper.

[DumpsterDiver]

urges those with generous plans to either embrace cheaper insurance or pay taxes on part of it,

Somebody, somewhere, needs to go embrace a grenade. (Any damages incurred will likely be covered by their embraceable cheaper insurance.)

[Owen]

You're not correct.

FR does NOT have a good feel for this world. The reason is most FReepers are getting a group plan through their jobs. The problem with this is it corrupts FR's perspective of normal American life -- which are the self employed, employees of very small businesses who can't offer health insurance, and a growing additional group are early retirees -- who by definition are not yet 65 and can't get Medicare yet.

Group plans do NOT exclude pre-existing conditions. Repeat. Group plans generally do not exclude pre-existing conditions.

Individual plans can. Insurers won't take on that risk.

The world is changing, people. Retirees are almost NEVER provided health insurance as part of an early out package. They have to find their own -- and if during those years they were part of a group plan they developed a health problem then they have a pre-existing condition and No Insurer Will Cover Them.

As for the idea of taxing superb health coverage, that generally will focus on senior executives who go to hyper thorough physicals that cost 10's of thousands of dollars. The cost of that is paid by the company and the company is now currently taking it as a deduction from its generic sales revenue. So this would not really be a tax increase. It would be more of a closing of that loophole of the company.

People, FR has to get calibrated on this. Health Insurance is likely going to be a bigger issue in 2008 than Iraq. Iraq will be done as a victory or done as a defeat by then.

The problem of pre-existing conditions is crushing. Early retirees face risks to their life savings by not being able to get insurance. The boomers are aging and this group is growing.

[SheLion]

Can someone explain the difference between Democrats and Republicans again? Lately, I'm having a hard time differentiating between the two.

They are all the same.  Power hungry idiots who have long forgotten who they work for.

As I see it, most of our lawmakers ARE corrupt and the ones who aren't are too scared when they go home at night to stand up to the corrupt ones.

Who would protect them?  So, the good lawmakers have to be "good little people" and just go along with the corrupt lawmakers or else!  Pity, isn't it. 

Can someone explain the difference between Democrats and Republicans again? Lately, I'm having a hard time differentiating between the two.

They are all the same.  Power hungry idiots who have long forgotten who they work for.

As I see it, most of our lawmakers ARE corrupt and the ones who aren't are too scared when they go home at night to stand up to the corrupt ones.

Who would protect them?  So, the good lawmakers have to be "good little people" and just go along with the corrupt lawmakers or else!  Pity, isn't it. 

[Reagan Man]

Big government Republicanism meets social engineering.

What's up Doc!? LOL

[Bogeygolfer]

"The problem of pre-existing conditions is crushing. Early retirees face risks to their life savings by not being able to get insurance. The boomers are aging and this group is growing."

It's not nearly as bad as it once was and we've made enormous strides in addressing this problem, however it's a state issue and every state is different. Pre ex is largely waived if you've had continuous coverage however individual carriers may decline you outright since they can't attach pre ex. California and many states have addressed this by offered guarantee issue policies for early retirees however at a greater expense. We also have 36 monhts of COBRA so we're really talking about folks who retire pre age 62 with health conditions who have to pay a mark up for the guaranteed product. I think we've come a long way in this area and could solve this issue separately.
I agree this is in no way a tax increase and more resembles the efforts to reduce the marriage penalty. He's talking about reducing the deduction for group insurance, not eliminating it and correspondingly increasing the deduction for private individual insurance. This is a glaring gap that's existed far too long and strikes me as a no brainer. Groups need to continue increasing their deductibles and decreasing their deductibles. I'm on a HSA as of Jan. 1 and I can't tell you enough about how efficient it is.

[Hildy]

Early retirees? What age do you consider being an early retiree? I mean, I don't want to sound rude, but for many Americans the only reason they work is for health insurance. So why should early retirees be any different? At least the retiree as something like 18 months of cobra. Then, at 65, they get Medicare...what am I missing here?

[oceanview]

what? I have to pay taxes now on my employer provided health insurance?

[EagleUSA]

The problem of pre-existing conditions is crushing. Early retirees face risks to their life savings by not being able to get insurance. The boomers are aging and this group is growing.
------
Yes, this is a major problem. So what is your idea for a solution?? What can early retirees do? Should the government disallow rejection for pre-existing conditions, or allow targeted Medicare coverage for pre-existing issues for those not yet 65 who have thier own policies...the latter sounds like a fair idea to me.

[Bogeygolfer]

"Basically if you dont have health insurance you get a tax break. If your job gives you health insurance you'll pay tax on it to cover the new tax break. Redistribution at its worst!"

That's not even close to a fair analysis. As it stands people with individual coverage are left paying with after tax dollars while group coverage gets a 100% deduction. This is an effort to balance that as well as to continue to encourage higher deductibles which eliminate waste in the system. People run to the emergency room with colds or pains on a regular basis as well as uncounted trips to the doctors which could be handled with over the counter meds. Waste is a killer and the high deductible do wonders. The break in premium so far outweighs the higher deductible since the insurance carrier knows the end result will be far less claims when it's our money we're spending they can pass it along and still come out ahead. So far it's working extremely well and health savings accounts are booming.

[Kozak]

What are you talking about?

You don't get the tax break UNLESS YOU buy insurance. Personal responsibility. Right now it's skewed all in favor of employers which is a very inefficient way to insure people.

[oceanview]

the "normal american life" you cite does include those groups yiu mention - but also includes a boatload of people in the private sector EARNING health coverage as part of their compensation. My employer doesn't GIVE me health coverage, I EARN it. and now I have to pay a new tax on it?

the hell with this.

if this tax passes, the republican party can kiss the votes of middle class private sector wage earners with health coverage - goodbye.

[oceanview]

if I want to retire at 58, unless I can buy into my (former) employers plan - its hard to get gap insurance to bridge to medicare.

[sphinx]

Basically if you dont have health insurance you get a tax break. If your job gives you health insurance you'll pay tax on it to cover the new tax break. Redistribution at its worst!

Not really. Employer-paid benefits are in fact income and should be taxed as such. Removing the tax break for non-cash benefits would be an important step toward unhooking from the third-party payment system, which is a big part of the health care problem.

If we are going to subsidize health insurance at all (which IMHO we should not, except for low-income individuals), the subsidy should be equalized for people whose employers don't cover them.

There is no reason why Joe, who works for GM, Intel, or the government, should receive tax-subsidized health care while Sam, who works for the corner laundry, does not. In fact, Joe is probably making a lot more to begin with. While there are certainly exceptions to the rule, the tax treatment of health insurance is a classic regressive subsidy.

[oceanview]

so you think the tax is only going to cover "senior executives"? I doubt that, that segment is too small to be worthy of some special tax. no, its likely to be a broad based tax on anyone earning a decent health care plan at their place of employment.

[Hildy]

There are lots of options out there. You may have to pay through the nose. But most private payers do. Why should you be different?

[oceanview]

so let's use the tax to punish everyone down to a level where they are getting crappy coverage. that sounds like your plan.