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Health Insurance Costs
Jan. 13th, 2010 02:11 amPlease don't ask me why I'm awake. I'll be going to bed shortly anyways.
So: according to Robert Reich, right now the back and forth between the US House of Representatives and their colleagues in the US Senate is how to pay for expanded access to health care. One one side, the House, they want a surtax on incomes over $1 million a year. On the other side, the Senate, they want to put a tax on more costly health insurance.
Some of you may have heard that unions heavily oppose the proposed tax on more expensive plans. There's a very good reason for this: the unions have often given up higher wage increases in order to get better health care for its members. As a result, suddenly they are looking at their members having to pay extra taxes on their insurance.
A lot of this should come down to who can afford this. I mean, it sounds fair, on paper, to tax more expensive health care plans to help cover other people's health care. But then there's the details - and the devil is in those details. In this case, the Devil is who would pay that tax. Health care costs and health insurance plans have both risen far faster than the rate of inflation. However, the cutoff for not being taxed on your insurance will go up yearly only by the overall rate of inflation, not the rate of health insurance inflation. This is a milder form of what made the Alternative Minimum Tax so devastating, as it wasn't even pegged to inflation at all.
Brief math: Pricey health insurance plan for your family costs, say, $20,000 between what you pay and what your employer pays. The tax is on plans that cost, say, $24,000. You think, no problem. Still, health insurance costs have gone up at least 8% a year while inflation is more like 3%. In five years that tax starts to hit you, and you think, but I don't have one of those fancy Cadillac health insurance plans! Well, no... and that's the point.
So, compare this to a surtax on incomes over $1M a year, 5.4%. That is less than the rate most of us effectively pay for Social Security. By definition, these are people who can afford it. Unless you have a family of 14 kids, all going to Ivy League schools at once with no scholarships, or you have a major crisis like your surprisingly uninsured mansion burning down and somehow the banks will not lend you money despite your million dollar income, there is no conceivable way that your absolutely necessary expenses hits $1M.
I don't know many millionaires. I know absolutely nobody earning $1M a year. The only person I knew who might have conceivably earned that much in a year, who mind you probably didn't after businesses expenses and has not been among the living for a while, could easily afford such a surtax. He would have grumbled about it too, but he would not have been truly significantly hurt by it.
The wealthiest, by the way, are the only people who have seen major wage gains in the past 20+ years when you account for inflation; this includes plenty of people earning six figures as well as those in the rarefied seven figure income bracket.
So, which approach do you think is more fair?
So: according to Robert Reich, right now the back and forth between the US House of Representatives and their colleagues in the US Senate is how to pay for expanded access to health care. One one side, the House, they want a surtax on incomes over $1 million a year. On the other side, the Senate, they want to put a tax on more costly health insurance.
Some of you may have heard that unions heavily oppose the proposed tax on more expensive plans. There's a very good reason for this: the unions have often given up higher wage increases in order to get better health care for its members. As a result, suddenly they are looking at their members having to pay extra taxes on their insurance.
A lot of this should come down to who can afford this. I mean, it sounds fair, on paper, to tax more expensive health care plans to help cover other people's health care. But then there's the details - and the devil is in those details. In this case, the Devil is who would pay that tax. Health care costs and health insurance plans have both risen far faster than the rate of inflation. However, the cutoff for not being taxed on your insurance will go up yearly only by the overall rate of inflation, not the rate of health insurance inflation. This is a milder form of what made the Alternative Minimum Tax so devastating, as it wasn't even pegged to inflation at all.
Brief math: Pricey health insurance plan for your family costs, say, $20,000 between what you pay and what your employer pays. The tax is on plans that cost, say, $24,000. You think, no problem. Still, health insurance costs have gone up at least 8% a year while inflation is more like 3%. In five years that tax starts to hit you, and you think, but I don't have one of those fancy Cadillac health insurance plans! Well, no... and that's the point.
So, compare this to a surtax on incomes over $1M a year, 5.4%. That is less than the rate most of us effectively pay for Social Security. By definition, these are people who can afford it. Unless you have a family of 14 kids, all going to Ivy League schools at once with no scholarships, or you have a major crisis like your surprisingly uninsured mansion burning down and somehow the banks will not lend you money despite your million dollar income, there is no conceivable way that your absolutely necessary expenses hits $1M.
I don't know many millionaires. I know absolutely nobody earning $1M a year. The only person I knew who might have conceivably earned that much in a year, who mind you probably didn't after businesses expenses and has not been among the living for a while, could easily afford such a surtax. He would have grumbled about it too, but he would not have been truly significantly hurt by it.
The wealthiest, by the way, are the only people who have seen major wage gains in the past 20+ years when you account for inflation; this includes plenty of people earning six figures as well as those in the rarefied seven figure income bracket.
So, which approach do you think is more fair?
