Bush's health insurance plan
On Tuesday Bush will introduce a plan to help expand health insurance coverage to some of the 47 million uninsured. The plan calls for taxing employer-provided health insurance that exceeds $15,000 per year for a family (or $7,500 for an individual.) So, if a family receives $16,000 worth of employer-provided health insurance per year, they would pay taxes on $1,000 - about $250. This tax revenue would then offset a tax break that would be given to those who buy their own insurance. All privately-bought insurance of $12,000 per family (or $6,000 per individual) would be tax deductibe. The $12,000 tax break would apply even if the insurance costs less.
I'm a selfish capitalist piggy so the first way I looked at this plan is: "How will it affect me?"
Right now I buy health insurance through my business. It is a tax-deductible expense on my LLC's business tax returns but is then counted as taxable "income" on my personal tax. My premium is about $4,000 per year. Under Bush's proposal, I will end up having $6,000 of income sheltered and will end up paying no taxes on $2,000 of my income. That's about $500 less in taxes per year.
The fact is that only a very small number of people will actually be taxed. Only high-payed execs get employer-provided health insurance that costs more than $7,500 per year per individual. A premium of $10,000 per year buys almost perfect health insurance - no deductibles, no co-pays and 100% coverage for everything. So a few fat cats with million dollar salaries will end up paying taxes on $2,500 per year (about $600) for "no out of pocket expenses" insurance.
Eventhough I pay about $4,000 a year for my health insurance, there are other costs. I have a deductible of $1,500 and am only covered for 80% of all treatment up to $3,500 "out of pocket expenses." That means my total health-related costs are $9,000. If Bush's plan is adopted, I will probably increase my insurance premium to $6,000 in order to decrease my "out of pocket expenses."
The fact is that my bottom line is hardly affected at all. No matter how you juggle it, you still have to find the money to pay for the insurance in the first place. The tax break for those who buy their own insurance is some incentive for enterprising freelancers and self-employed folks to buy insurance but it won't do a thing for those who can't afford to buy insurance in the first place.
It's not a bad plan - at least in does not get bureaucrats involved in the health insurance business - but I doubt if the increased revenue from taxing a few hundred- thousand fat cats' insurance will cover the costs of the tax breaks given to the rest of us. How will we pay for it? More deficit spending? More federal bonds sold to the Chinese government?
Charlie Rangel of course immediately condemned Bush's proposal.
We need more businessmen in DC who know how to balance budgets not more aristocrats, trust fund bums and heirs to a fortunes who have never had to tightened their belts once in their lives.
I'm a selfish capitalist piggy so the first way I looked at this plan is: "How will it affect me?"
Right now I buy health insurance through my business. It is a tax-deductible expense on my LLC's business tax returns but is then counted as taxable "income" on my personal tax. My premium is about $4,000 per year. Under Bush's proposal, I will end up having $6,000 of income sheltered and will end up paying no taxes on $2,000 of my income. That's about $500 less in taxes per year.
The fact is that only a very small number of people will actually be taxed. Only high-payed execs get employer-provided health insurance that costs more than $7,500 per year per individual. A premium of $10,000 per year buys almost perfect health insurance - no deductibles, no co-pays and 100% coverage for everything. So a few fat cats with million dollar salaries will end up paying taxes on $2,500 per year (about $600) for "no out of pocket expenses" insurance.
Eventhough I pay about $4,000 a year for my health insurance, there are other costs. I have a deductible of $1,500 and am only covered for 80% of all treatment up to $3,500 "out of pocket expenses." That means my total health-related costs are $9,000. If Bush's plan is adopted, I will probably increase my insurance premium to $6,000 in order to decrease my "out of pocket expenses."
The fact is that my bottom line is hardly affected at all. No matter how you juggle it, you still have to find the money to pay for the insurance in the first place. The tax break for those who buy their own insurance is some incentive for enterprising freelancers and self-employed folks to buy insurance but it won't do a thing for those who can't afford to buy insurance in the first place.
It's not a bad plan - at least in does not get bureaucrats involved in the health insurance business - but I doubt if the increased revenue from taxing a few hundred- thousand fat cats' insurance will cover the costs of the tax breaks given to the rest of us. How will we pay for it? More deficit spending? More federal bonds sold to the Chinese government?
Charlie Rangel of course immediately condemned Bush's proposal.
We need more businessmen in DC who know how to balance budgets not more aristocrats, trust fund bums and heirs to a fortunes who have never had to tightened their belts once in their lives.
posted by Joubert at 4:47 PM
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