Posted on 11/22/2014 8:27:02 AM PST by Kaslin
Judging by the midterm election results, the American public hasn’t forgotten President Obama’s broken promise that “if you like your health plan you can keep your health plan.” The good news for healthcare is that the fallout has disrupted the political status quo so much that a partially patient-centered healthcare reform may be possible soon after the president leaves office.
Even partial reform could bring welcomed relief to millions who lost their health plans. In a study released in October, Edmund F. Haislmaier and Drew Gonshorowski of The Heritage Foundation calculate that 3.8 million people lost benefits from their jobs in the first half of 2014. The two researchers do not segment the job losses by size of firm, but it is a safe bet that Obamacare is accelerating the collapse of employer-sponsored benefits, especially in firms of fewer than 50 employees.
This seems counter-intuitive, because Obamacare’s employer mandate to offer “affordable” health benefits will apply only to bigger firms. (The mandate kicks in next year for employers with 100 or more full-time equivalents and in 2016 for firms with 50 to 99 workers.)
However, for a small firm with a low-paid workforce, the attraction of dropping benefits and sending employees to an Obamacare exchange, where workers can get a tax credit, surely works to accelerate a trend we have seen for years. The Urban Institute has calculated that only 35.2 percent of firms with fewer than 50 employees offered health benefits in 2012, down from 44.5 percent in 2002.
It’s worth recalling that the only reason employers control workers’ health benefits is that if a worker gets health benefits on the job, the benefits are non-taxable. If a worker takes the cash value and buys his own health plan, he is taxed on it. Pre-Obamacare, this alternative was too costly for most people to afford.
But after years of rising costs, employers have found it increasingly hard to continue offering health benefits. Those who do must have either their own internal bureaucracy to manage the offering or enough money to hire a benefits consulting firm to figure it out. Smaller firms with meager resources have no hope of offering coverage.
The American workforce, however, has been habituated to employer-based benefits for decades. Any attempt to reform the taxation of such perks therefore has faced ferocious political opposition. Recall, for example, the vitriol Senator John McCain had to endure when, during his 2008 presidential campaign, he proposed a universal, refundable tax credit for buying individual health insurance. The attack slogan – “The Republicans will tax your job-based health insurance” – was, very narrowly, technically correct, but it evaded the bigger truth.
Fortunately, the near future will offer renewed hope for tax fairness. By 2017, few – if any – workers at small firms will be getting health benefits at work, but many will be getting tax credits through the Obamacare exchanges. So, a reform that frees workers from the restrictions of both employer-based and exchange-based health plans would be a very do-able objective for the next president.
An example of such a reform comes from a conservative group called The 2017 Project. Their proposal would give adults under 35 years of age a tax credit of $1,200 a year; those 35 to 49 years old would get $2,100; and those 50 or older would get $3,000. Parents would get an additional $900 per child. People who can buy health insurance for a lower premium would be allowed to deposit the leftover tax credit in a Health Savings Account.
These tax credits, however, would be available only to employees of firms with fewer than 50 full-time equivalent employees. Workers in larger firms, who remain in the employer-based market, would retain non-taxable health benefits, up to a limit. The tax exclusion would be capped at the 75th percentile of annual premiums, which is currently about $8,000 for a single person. The value of benefits above this cap would be taxable to the employee. (The cap is a simple and straightforward way to immunize the proposal from accusations that the plan attacks employer-based benefits.)
The 2017 Project’s proposal has a couple of great advantages over Obamacare. First, it would reduce the federal deficit by $1.3 trillion over ten years, according to one economic consulting firm. Second, because the tax credit would not phase out as a worker’s income rises, it would avoid the extremely high effective marginal income tax rates that Obamacare creates and that discourage workers from earning higher incomes.
The plan needs refinement on a couple of technical issues. Its underwriting provisions are not actuarially sound, and it will cause some disruption in firms of around 50 workers who have both high-earning and low-earning employees. Nevertheless, it is a refreshing approach to taking advantage of the great opportunity 2017 will offer for real health reform.
Did this woman injure her arm pulling her head out of her a$$?
She must have
It is supposed to be a “reform” that works for workers when their health insurance as a benefit of employment is cut? This is just another domino to fall as our standard of living plummets to meet the rising standard of living of Asia’s rapidly-growing middle class (our diminished purchasing power/de-valued wages was first).
The only thing that will make health care more affordable is to unleash market forces. The reason health insurance became so expensive in the first place is that lobbyists pressured state legislators into adding all kinds of mandates on insurance. Until people can buy only the insuranc they want and patients and providers are more directly connected, costs will continue to increase and quality and access will decline. Government screws up everything it touches.
So right. The first mistake was tying insurance to employment in the 40’s. That distorts both the insurance market and the employment market.
The only thing that makes sense is a big HSA-Health Savings Account plus major-medical. Then the doctor will work for the patient.
To accomplish this, the HSA has to be big. That leads to another necessary reform...TRUTH IN COST OF EMPLOYMENT.
Currently most people have no clue about employer share of health insurance, unemployment insurance, workers compensation insurance, and other “benefits”.
All “benefits” should be paid directly to the employee and appear on his pay stub. All the “benefits” should be paid to an institution chosen by the employee that pays out the major medical premium and invests the money in a diversified portfolio. To make this palatable to enough “moderates” to pass, we might need to agree to a one time “seed” of money into the accounts of low income workers whose parents are low income. But there would be no “seed” for those on welfare.
We won’t get the perfect solution. The goal is to move in the right direction.
Of course, tort reform, competition accross state lines and many other features are also necessary.
I went to the doctor in person so he could order a lab test. Then I went to the doctor in person to get the results of the lab test. I should be able to get the lab test without a doctor’s order. and the doctor should be able to email me the results of the lab test, asking me to come in and see him personally only if the results were seriously negative. Of course, 95% of results are that there is no disease.
The free market should allow cost cutting through technology.
It is pure BS that health benefits are considered a cost of doing business for the business, but are considered income for an employee.
They are a cost of doing business for everybody. The tax code is the problem.
Health care is a cost for anybody. Exclude ANY cost of doing business from being taxed for Everybody.
Food, clothing, shelter, health care, insurance, transportation, education, etc. are ALL costs of doing business for the individual/family. ALL should be excluded from income. The only thing that should be taxed is PROFIT.
There is also a basic flaw in the health insurance market where there is a third party between the provider of services and the recipient; if the recipient had to pay all costs, prices would fall because of the direct exchange. Many people have reported the lower prices as a result of paying cash for procedures/treatment; when there is no insurance company/middle man to fleece, there are efficiencies in the system. Doctors certainly wouldn’t be billing for unnecessary nonsense used to inflate bills; the recipient wouldn’t stand for it if they were on the hook for the full price.
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