The fight over taxing health insurance

[Greenbeard]

Interesting item from Politico today:

A FAMILIAR HEALTH TAX BATTLE — Leading employer groups and health insurers are bristling at proposals from prominent former Trump administration officials and House Republicans to increase taxes on some employer plans if Obamacare’s enhanced premium tax credits expire.

The context: Premiums for employer insurance plans aren’t typically taxable, which incentivizes employers to offer more generous plans. The Paragon Health Institute, a conservative think tank led by former Trump policy adviser Brian Blase, has argued that Congress should allow the tax credits to expire after 2025, saying the Affordable Care Act didn’t intend to fully subsidize plans for enrollees.

If that were to happen, Blase and Theo Merkel of Paragon recently argued, Congress should cap the tax exclusion at 125 percent of the average value of an employer plan as part of broader reform. They contend it would reduce wasteful spending by disincentivizing unnecessarily robust coverage and, in turn, allow employers to offer higher wages.

“We think this is a modest way to ensure that people can still receive assistance for purchasing health insurance through their employer, but at the top end, rein in some of the excesses,” Merkel told Pulse.

The Republican Study Committee — the largest House GOP caucus — endorsed capping the exclusion in a budget plan earlier this year. The proposals are familiar. John McCain called to end tax breaks on insurance in his 2008 presidential campaign, as did former House Speaker Paul Ryan in his Obamacare replacement bill in 2017.

Of course insurers, employers, and unions (and perhaps most people) don't like this idea. But it does get at the fact that a bottomless subsidy for employer-based coverage has some distortionary impacts.

Yet capping the tax exclusion for employer-based coverage was already attempted via the ill-fated "Cadillac tax" in the Affordable Care Act, which was first delayed then ultimately repealed before ever taking effect. And pairing the idea of some upper limit to the tax exclusion for employe-based coverage with the demand that the enhanced tax credits in the ACA marketplaces expire is dumb, these are different issues.

But it's interesting some are willing to talk about this idea again. Is a world where employer-based coverage isn't the norm imaginable for people?

 

[Stealers Wheel]

Interesting item from Politico today:



Of course insurers, employers, and unions (and perhaps most people) don't like this idea. But it does get at the fact that a bottomless subsidy for employer-based coverage has some distortionary impacts.

Yet capping the tax exclusion for employer-based coverage was already attempted via the ill-fated "Cadillac tax" in the Affordable Care Act, which was first delayed then ultimately repealed before ever taking effect. And pairing the idea of some upper limit to the tax exclusion for employe-based coverage with the demand that the enhanced tax credits in the ACA marketplaces expire is dumb, these are different issues.

But it's interesting some are willing to talk about this idea again. Is a world where employer-based coverage isn't the norm imaginable for people?

Employer-sponsored healthcare insurance is a scam.

Yes, it's a nice part of one's benefit package, but there's a catch:

You have to be an employee, which means you have to have a job - a full-time job.

Now, if you're well enough to go to work every day, you probably are not very sick, therefore you probably don't need much in the way of healthcare. Multiply that by millions and you can see the profits growing for the insurance companies.

And, if you get really sick or injured, what's the first thing you lose? Your job! And the second thing you lose? Your health insurance coverage - right when you need it the most!

It's a scam!

 

[Greenbeard]

Employer-sponsored healthcare insurance is a scam.

Yes, it's a nice part of one's benefit package, but there's a catch:

You have to be an employee, which means you have to have a job - a full-time job.

Now, if you're well enough to go to work every day, you probably are not very sick, therefore you probably don't need much in the way of healthcare. Multiply that by millions and you can see the profits growing for the insurance companies.

And, if you get really sick or injured, what's the first thing you lose? Your job! And the second thing you lose? Your health insurance coverage - right when you need it the most!

It's a scam!

Definitely problematic to have health insurance linked in that way. The “pros” of the employer-based system vs a market-based one seem to me to be primarily that (1) it hides the full cost of people’s coverage from them (ignorance is bliss!), and (2) it’s paternalistic, which many people seem to want even if they’d never acknowledge that— it’s much less mentally taxing to have an employer making the big decisions and curating a small set of options than shopping for oneself in the open marketplace.

But the list of cons would be a lot longer.

 

[Cosmo]

Employer-sponsored healthcare insurance is a scam.

In that sense, insurance is in general. The whole point of running an insurance company is profit after all.

Yes, it's a nice part of one's benefit package, but there's a catch:

You have to be an employee, which means you have to have a job - a full-time job.

Just like the doctor or nurse treating you. It's almost like goods and services don't come from nothing, but from people who work.

Now, if you're well enough to go to work every day, you probably are not very sick, therefore you probably don't need much in the way of healthcare. Multiply that by millions and you can see the profits growing for the insurance companies.

And, if you get really sick or injured, what's the first thing you lose? Your job! And the second thing you lose? Your health insurance coverage - right when you need it the most!

It's a scam!

Or you just save up while you work so you can afford to pay for COBRA.

 

[Stealers Wheel]

In that sense, insurance is in general. The whole point of running an insurance company is profit after all.

That's correct and when it comes to healthcare, we treat it like a commodity. It goes to the highest bidder. If you're too poor to afford access to health for yourself or your family, oh well, it sucks to be you. And when does the insurance companies want to dump you? Typically when you're sick and need access to healthcare.

The rest of the industrialized world treats healthcare like infrastructure. Why can't we?

Just like the doctor or nurse treating you. It's almost like goods and services don't come from nothing, but from people who work.

Or you just save up while you work so you can afford to pay for COBRA.

The rest of the civilized world has figured out how to deliver healthcare to their people without driving them into bankruptcy. Why can't we?

 

[Cosmo]

That's correct and when it comes to healthcare, we treat it like a commodity. It goes to the highest bidder.

That's not how capitalism works. It goes to people who can pay enough, and that "enough" is based on its availability vs the demand for it (as in, supply and demand).

If you're too poor to afford access to health for yourself or your family, oh well, it sucks to be you. And when does the insurance companies want to dump you?

Insurance companies can't "dump" someone like that. Insurance doesn't work this way.

The rest of the industrialized world treats healthcare like infrastructure. Why can't we?
The rest of the civilized world has figured out how to deliver healthcare to their people without driving them into bankruptcy. Why can't we?

The rest of the industrialized world also has the USA to spend on military protection and develop much (or most, depending on fields you look at) of the medicine for them.

It's easy to pound your socialist chest when someone else does the heavy lifting.

 

[Stealers Wheel]

That's not how capitalism works. It goes to people who can pay enough, and that "enough" is based on its availability vs the demand for it (as in, supply and demand).

Insurance companies can't "dump" someone like that. Insurance doesn't work this way.

The rest of the industrialized world also has the USA to spend on military protection and develop much (or most, depending on fields you look at) of the medicine for them.
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It's easy to pound your socialist chest when someone else does the heavy lifting.

If you have employer-sponsored health insurance, and you lose your job due to injury and/or illness, you will lose your employer-sponsored health insurance. Yes, insurance companies can and do 'dump' sick people all the time. That's how for profit companies operate. Take your money for as long as they can, and when you need coverage, they try everything, including lying to your face to make you go away.

I've dealt with health insurance companies for over 40 years. I've had them lie to me, and when I call them on it, they have reluctantly paid what they were supposed to.

 

[Cosmo]

If you have employer-sponsored health insurance, and you lose your job due to injury and/or illness, you will lose your employer-sponsored health insurance.

No, you don't. Have you never heard of COBRA?

Yes, insurance companies can and do 'dump' sick people all the time. That's how for profit companies operate. Take your money for as long as they can, and when you need coverage, they try everything, including lying to your face to make you go away.

I've dealt with health insurance companies for over 40 years.

40 years? Really? And you don't know about COBRA?

 

[Stealers Wheel]

No, you don't. Have you never heard of COBRA?

40 years? Really? And you don't know about COBRA?

Oh, I know all about COBRA. My daughter was born under COBRA. Out of work and pick up the tab of $1000+/month to keep your health insurance. For what? 18 months? Fun times.

 

[Cosmo]

born under COBRA

No, that's not COBRA. You must be talking about something else.

 

[Stealers Wheel]

No, that's not COBRA. You must be talking about something else.

Nope! I had 60 days to sign up for COBRA when left my employer. My wife informed me she was pregnant on day 58! I had to run back to my old employer and borrowed the money to pay the 2 months back premiums. 9 months later my daughter was born under COBRA because my new employer didn't offer employee health insurance.

I had to liquidate most of my retirement funds at that time to keep up the payments and I took a big hit on early withdrawals to do that.

 

[Cosmo]

my daughter was born under COBRA

Wow they sure "dumped" you!

 

[Stealers Wheel]

Wow they sure "dumped" you!

Well, if you knew the history of COBRA, you would know that that federal law was fought tooth and nail by the insurance industry. They spent millions lobbying Congress to kill that bill. Even so, most working class Americans can't afford $1000+ insurance premiums when they are out of work. I happened to be working in a high paying profession and was able weather that financial storm.

 

[Cosmo]

Well, if you knew the history of COBRA, you would know that that federal law was fought tooth and nail by the insurance industry. They spent millions lobbying Congress to kill that bill. Even so, most working class Americans can't afford $1000+ insurance premiums when they are out of work. I happened to be working in a high paying profession and was able weather that financial storm.

Your lack of savings despite working in a high-paying profession is insurance industry lobbyists' fault?

 

[Stealers Wheel]

Your lack of savings despite working in a high-paying profession is insurance industry lobbyists' fault?

I had been out of college less than 5 years. I was still paying off student loans. If the lobbyists had their way I would not been able to afford the $30,000 c-section my wife had to endure.

 

[Cosmo]

I had been out of college less than 5 years. I was still paying off student loans.

Whose fault is that?

 

[Stealers Wheel]

Whose fault is that?

Spin it anyway you like. Insurance companies, particularly health insurance companies are not your friend.

I knew a young mother who was denied coverage for cervical cancer treatment because, according to the insurance company, she lied on her health history.

The question she answered falsely was worded like this:

"Have you ever been diagnosed with or tested for cancer?" She answered No.

Their reply was "Your medical history indicates you've had an annual pap smear every year for the past ten years. Pap smears are a test for cancer. Your claim is denied for falsifying your application."

The young lady didn't know a pap smear was a screening test for cervical cancer. She thought it was was a test for UTIs or STDs.

She had to sell her home and declared bankruptcy following the hysterectomy.

Insurance companies are not your friend.

 

[Cosmo]

Spin it anyway you like. Insurance companies, particularly health insurance companies are not your friend.

I knew a young mother who was denied coverage for cervical cancer treatment because, according to the insurance company, she lied on her health history.

The question she answered falsely was worded like this:

"Have you ever been diagnosed with or tested for cancer?" She answered No.

Their reply was "Your medical history indicates you've had an annual pap smear every year for the past ten years. Pap smears are a test for cancer. Your claim is denied for falsifying your application."

The young lady didn't know a pap smear was a screening test for cervical cancer. She thought it was was a test for UTIs or STDs.

She had to sell her home and declared bankruptcy following the hysterectomy.

Insurance companies are not your friend.

Cool story, Bro.

 

[Stealers Wheel]

Cool story, Bro.

I've got a bunch of them. Like I said earlier, I've been dealing with insurance companies for 40 years. I learned a few things during that time.

 

[Cosmo]

I've got a bunch of them. Like I said earlier, I've been dealing with insurance companies for 40 years. I learned a few things during that time.

Hopefully you've learned to save money, but I doubt it. Looks like you've learned to blame others for your own poor decisions instead.

 

[Stealers Wheel]

Hopefully you've learned to save money, but I doubt it. Looks like you've learned to blame others for your own poor decisions instead.

Well, aren't you just the little judgmental one! Now that your arguments have fallen flat, you decide to take personal shots. A sure sign you're out of bullets.

FWIW, I'll be retiring very comfortably within the year.

 

[Cosmo]

Well, aren't you just the little judgmental one! Now that your arguments have fallen flat, you decide to take personal shots.

You said insurance companies can just "dump" you at will. You then brought yourself in as an example, and immediately admitted the opposite happened to you: no dumping; you kept your insurance. That's when you lost the argument. Then you proceeded to complain about what's basically your own fiscal irresponsibility. Somehow you think this is a win for you?

 

[Greenbeard]

Interesting tangentially-related research on the impact premium growth (in this case driven by hospital price increases) can have on jobs via employer-based insurance:

When Hospital Prices Go Up, Local Economies Take a Hit

Rising healthcare prices have long eroded American wages. They are doing that by eating into jobs.

Companies shed workers in the year after local hospitals raise their prices, new research found. Higher hospital prices pushed up premiums for employees’ health insurance, which businesses help pay for.

The new study, scheduled to be published Monday as a National Bureau of Economic Research working paper, is a comprehensive look at one way companies manage those higher premiums: cutting payrolls.

“Employers that face increases in healthcare spending respond by laying off workers who they can no longer afford to retain,” said Zarek Brot-Goldberg, an economist at the University of Chicago and one of the researchers involved in the study.

The new study tracked price changes after roughly 300 mergers of nearby hospitals between 2010 and 2015, using data from three of the nation’s largest health insurers.

To measure what happened next to local jobs, the researchers analyzed corporate filings with the Labor Department on fully insured premiums and employee tax records of earnings and unemployment.

The findings: As hospital prices went up 1%, so did the percentage of people who ended up out of a job. The layoffs dealt a blow to their communities. Income-tax revenue dropped and payments for tax-funded unemployment insurance increased 2.5%.