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Mcain plan will dessimate employer based health coverage

bandaidwoman

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http://www.nytimes.com/2008/09/16/opinion/16herbert.html?hp

I ama small business owner and provide insurance for my 25 plus employees.
Does anyone else think this is a bad idea?

A study coming out Tuesday from scholars at Columbia, Harvard, Purdue and Michigan projects that 20 million Americans who have employment-based health insurance would lose it under the McCain plan.



For starters, the McCain health plan would treat employer-paid health benefits as income that employees would have to pay taxes on.

“It means your employer is going to have to make an estimate on how much the employer is paying for health insurance on your behalf, and you are going to have to pay taxes on that money,” said Sherry Glied, an economist who chairs the Department of Health Policy and Management at Columbia University’s Mailman School of Public Health.

According to the study: “The McCain plan will force millions of Americans into the weakest segment of the private insurance system — the nongroup market — where cost-sharing is high, covered services are limited and people will lose access to benefits they have now.”

The net effect of the plan, the study said, “almost certainly will be to increase family costs for medical care.”
 
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I was just reading about this on the United Steel Workers Union's website and was astonished! :shock: I'm surprised no one is talking about this.

The USW has posted on their website a link to a comprehensive evaluation conducted by the Henry J. Kaiser Family Foundation (link re-established herein) of each presidential candidates health care plans and what they learned is that McCain's plan would ultimately create a financial hardship on American families by essentially forcing them to pay for their own health care and place little responsiblity on the private health care system to be accountable for the services, premiums or fees they charge, whereas Obama's plan would provide more healthcare options in both the public and private sectors thereby creating no additional financial burden on the American people.

McCain's camp will talk about their health care tax credit ranging from $2,500 (for individuals) up to $5,000 (for families), but those credits would only be granted if you're able to pay for your own health care. Otherwise, you don't get the credit! But the big message w/McCain's health care plan is, "American people, go out and find your own health care". Thus, it wouldn't surprise me if privately he claimed that part of the reason AIG is in trouble is because they wrote too many policies through employer sponsor health care. Hence, in his opinion employer sponsored health care doesn't work. But it does!

The problem is insurance providers have tough restrictions on pre-existing medical conditions and change their premiums or don't adequately cover some treatments, medications, or health care services. Obama's plan would go a long way to close these gaps and make health care available and affordable to most Americans. But you don't have to believe me. Check out the summary review of both candidate's health care plans for yourself.
 
Honestly cant believe why there is not much furor over this. As an employer I lose my tax benefit by providing employee insurance,. For the public this essentially amounts to a hell of a huge income tax hike ( for the republicans here on the forum). This also means my healthy employees will bail and take a chance on individual health insurance market or forego insurance altogether while my employees with preexisting conditions and chronic disease (who are high utilizers) remain and now my emplyee coverage is dominated by high risk, high use patients and that just jacks up my premiums even more. It is a lose lose situation.
 
At the risk of distracting from the more interesting thread, I feel the need to stick my nose in here.

I think it's a great idea, but then I believe that a more free-market is the answer to our health care cost problem and our access problem.

I'm not going to refute the whole op-ed but I will address the highlighted sections as they seem the most important to you.

NYT said:
"For starters, the McCain health plan would treat employer-paid health benefits as income that employees would have to pay taxes on. "

Why is this a bad thing? Employees make more money, and you don't have to spend time researching and selecting insurance options for them (although you retain the right to do so). Would you object to paying workers your share of their SS/Medicare taxes? It's essentially the same money and would be less bookkeeping for all involved.

What makes you think that all of your employees want the insurance that you select for them? What if they want more coverage, or less? Do you provide all of your employees with transportation to work and take the costs out of their pay, or do you allow them to spend their pay on the means of transportation they desire?

NYT said:
"It means your employer is going to have to make an estimate on how much the employer is paying for health insurance on your behalf"

Do you really not know how much you pay for coverage on each of your employees? I find this hard to believe.

NYT said:
"According to the study: “The McCain plan will force millions of Americans into the weakest segment of the private insurance system — the nongroup market — where cost-sharing is high, covered services are limited and people will lose access to benefits they have now.”"

I agree that the nongroup market is the weakest segment, because there has been no incentive to improve it. With this plan there will be. With millions of new customers insurers will compete to offer policies that individuals want instead of employers. Just like every other insurance market. High cost sharing is not a bad thing, what is the deductible on your auto insurance again? Limited covered services can be bad, but competition can fix this. People will only lose benefits if they are no longer willing to pay the premium for them.

Objective Voic said:
"McCain's plan would ultimately create a financial hardship on American families by essentially forcing them to pay for their own health care and place little responsiblity on the private health care system to be accountable for the services, premiums or fees they charge"

This is a tragic misrepresentation. While people will be paying for their own care, they will be getting higher wages with which to do so AND a tax credit (not a deduction) to do it with. You are misinformed about who can receive the credit as well. Everyone will receive the credit, and those credits will be sufficient to purchase a minimal plan on their own before taking into account the increased pay. "For example, according to McCain’s campaign, a typical worker in the lowest tax bracket could expect to pay about $1,500 in taxes and keep the remainder of the $5,000 tax credit." [1]

Of course the private system will be held accountable for services, premiums and fees. If the customer is not happy they will move to a different provider. What are you options now if you are unhappy with your employer provided insurance?
bandaidwoman said:
"As an employer I lose my tax benefit by providing employee insurance"

And instead you pay your employees higher wages. "Since on average employers pay $8,824 for a worker’s insurance, that is roughly what workers could expect to receive. The tax credit merely offsets the extra taxes that the worker would otherwise have to pay if he or she received that $8,824 as additional wages." [1] Are you so sure they'll complain?

bandaidwoman said:
"For the public this essentially amounts to a hell of a huge income tax hike"

No it doesn't. "The McCain campaign suggests that a worker in the top tax bracket whose employer contributes more than $14,285 per year toward paying for his or her insurance could still end up with a tax increase under this trade-off. According to the Kaiser Family Foundation, just 6 percent of workers are employed by companies where the average employer contribution exceeded $14,000, and not all of those workers are in the top tax bracket. Nearly all lower- and middle-income workers would end up better off." [1] (emphasis added)

bandaidwoman said:
"This also means my healthy employees will bail and take a chance on individual health insurance market or forego insurance altogether while my employees with preexisting conditions and chronic disease (who are high utilizers) remain and now my emplyee coverage is dominated by high risk, high use patients and that just jacks up my premiums even more."
Your healthy employees get screwed less and your risky employees have to pay for their higher risk. Your healthy employees will end up better off should they become sick later as they've had more money to save in an HSA until then (or pay extra for a plan with better preventative medicine access). Your already risky employees do get the short end of the stick, but frankly subsidizing inherit risk is not my idea of 'fair' to begin with.

[1] http://www.cato.org/pubs/bp/bp104.pdf

J
 
I particularly love how that hack Bob Herbert said "A study coming out Tuesday from scholars at Columbia, Harvard, Purdue and Michigan projects that 20 million Americans who have employment-based health insurance would lose it under the McCain plan" as if that was the end of it. He neglected to mention the second part of the study:

In all, the authors projected that 20 million people would lose their employer-sponsored insurance under McCain's plan, while 21 million people would gain coverage through the individual market

Herbert also fails to mention the "radical" portions of Obama's plan, which another study also panned.

Obama wants the government to subsidize the cost of health coverage for millions who otherwise would have trouble affording it on their own.

The Democrat would set up a kind of government-run shopping mall that would negotiate prices and benefits with private insurers. One choice would be a government-run plan. No participating company could turn someone away because of pre-existing cancer, heart disease or diabetes. Nor would someone have to pay a higher monthly premium based on those conditions.

The government would subsidize the cost for many who buy coverage through this exchange. But analysts say using third parties to subsidize the cost of a product exacerbates health inflation. Consumers and providers act as if any service that might yield some value should be covered. After all, it's largely somebody else who is picking up the tab.

"Any major expansion of coverage will be costly, and the Obama promise of affordability would require new, large, and rapidly growing federal subsidies that are unlikely to be sustainable, fiscally or politically,"
said the authors.

Obama would also require all but small businesses to make a "meaningful" payment for health coverage of their workers or contribute a percentage of payroll toward the cost of the public plan offered through the exchange. The authors said that either way, job losses or pay cuts would result.

The Associated Press: Economists take critical view of health plans
 
Solidus, regarding the "free market individual health market"

Since i deal with health insurance on a very intinmate level as both a provider, insurance biller, buyer and employer.


1. Administrative expenses are twice as high in nongroup markets as in group markets. The costs are higher because insurers in this market spend resources on medical underwriting. One reason that nongroup plans appear less costly is that they offer less coverage. The typical deductible in nongroup plans is about $2,750, compared to about $1,000 for group policies. Coinsurance rates average 26 percent in nongroup plans, compared to 20 percent in a typical employer-based plan.. Many services are not covered at all. Most of my patients with individual private insurance do not have basic screenings covered like 3000 dollar screening colonoscopies, mammograms and paps. I can only do a pap on them if they have a vaginitis! I already know that these individual policies do not offer the coverage my group plan does, which covers dental, vision, all screenings etc.


And this is examining healthy applicants. The ill are simply denied coverage outright in the individidual market.


Even if you pay exactly as much as your employer did, your plan will still be worse due to the higher cost of individual underwriting etc.



As for Mcain's worthless tax credi, it is not indexed to health costs -- which rise much faster than inflation -- or really to anything at all. That means, year-by-year, it buys you less.


Of course the private system will be held accountable for services, premiums and fees. If the customer is not happy they will move to a different provider. What are you options now if you are unhappy with your employer provided insurance?

Every two years we have a staff meeting and change plans depending on the best offers made for both coverage and cost and the employees can choose from 2-3 different plans. Right now we offer an HMO and PPO options.


Do you really not know how much you pay for coverage on each of your employees? I find this hard to believe.

As senior partner of a four doctor practice with 25 plus employees, yes and to the penny.

And instead you pay your employees higher wages.

Do you honestly believe every employer is going to give their employees a 8-10 thousand a year salary increase? As an employer I no longer get that tax benefit by just increasing their salary by the amount I paid into their health insurance.

For the record I dont think obamas plan is any better but why is Mcain destroying what is obviously working welll for most employees? As an employer his plan will save me money but as a physician I also know what lousy coverage these individual insurance plans cover. It wont get better because underwriting coverage for millions of individuals will involve more adminstrative expense.
 
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I particularly love how that hack Bob Herbert said "A study coming out Tuesday from scholars at Columbia, Harvard, Purdue and Michigan projects that 20 million Americans who have employment-based health insurance would lose it under the McCain plan" as if that was the end of it. He neglected to mention the second part of the study:

To quote the article you quoted...

Regarding Mcain's plan whom they weren't so keen about either.


The tax credit could help people buy insurance through their employer. Many would also use it buy coverage directly from insurers in the individual market. They could select from insurers licensed in any state. With more competition, costs would fall and quality would increase, McCain reasons.

Analysts writing in the journal warned against that approach.

They said employers would be less likely to offer coverage if they knew their workers could get it elsewhere. In all, the authors projected that 20 million people would lose their employer-sponsored insurance under McCain's plan, while 21 million people would gain coverage through the individual market — little more than a wash.

In other words his plan does nothing to increase the insurance coverage for Americans but has shifted the onus on individuals who will pay the same price or more for less coverage.


And as monthly insurance premiums rise and the tax break stays the same, even that gain would erode.

They agree with me on the fact that his tax breaks for those individuals will erode with time.

Another concern is that insurers would gravitate to states with less onerous coverage requirements. For example, 29 states insist insurers in the individual and small group market cover cervical cancer screenings. They could locate in states without such requirements

This is quoted from the same article you quoted. The bold highlights is what scares me about Mcain's plan.


Like I said earlier, Obama's plan is no better but Mcain is about to destroy something that works very well for those lucky encough to have employers provide insurance for them.
 
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Your healthy employees get screwed less and your risky employees have to pay for their higher risk. Your healthy employees will end up better off should they become sick later as they've had more money to save in an HSA until then (or pay extra for a plan with better preventative medicine access).

[1] http://www.cato.org/pubs/bp/bp104.pdf

J

Not true.

The key thing is if they stay healthy they continue their sweet deal with the individual plan. As soon as you become sick and start over utilizing the insurance plan my patient's with individual insurance plans see their premiums doubling or tripling or they get dropped altogether. I have seen at least a half a dozen patients drain their HSA as soon as they have something like leukemia where they need multimillion dollar bone marrow transplant procedure or chemotherapy. One was eventually dropped by his insurance during his bone marrow transplant. When one of my employees got diagnosed with breast cancer at age 40 our premiums went way up, not as high as it would be if we were a non group plan. What is to protect an individual? I can at least threaten to drop them and search out another plan to purchase for my company. I have done this twice and succeeded in getting premiums down. The individual buyer can't threaten to do this , she or he now has a prexisting that disqualifies them from jumping onto another plan and no hope of obtaining better coverage.
 
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