Disgruntled Republican Voter: I’m sure glad that I’m not one of those takers who expect the government to subsidize their health care. Everyone who takes a subsidy from the government is lazy and needs to get a better job that covers them.
Disembodied omniscient voice from above (think James Earl Jones): I’m glad you don’t want your health care subsidized by the government. So you will be in favor of having your health care from your employer being declared as income, and then you can pay taxes on it, right?
Disgruntled: I say – what are you talking about?
Disembodied: Health care benefits have never been considered as taxable income. This is a historical artifact from the time that health care was first provided to employees in WWII as a way to skirt wage controls.
Disgruntled: So what difference does it make who pays for it?
Disembodied: If businesses had to declare the value of health care as income for their employees, then the employees would be liable for taxes on this income. You just said you’d be happy to pay the taxes, right? Just so you wouldn’t be taking a subsidy from the government.
Disgruntled: I’m not sure … how much are we talking about here?
Disembodied: Let’s just use average figures here. You have family coverage, right?
Disembodied: Average employer cost for a family policy last year was $12,600 per year. Now you are pretty successful, you make between $19,000 and $75,000 per year, right?
Disembodied: Then you are in the 15% tax bracket. So if you had to declare $12,600 more in income, that means that the federal government is giving you about $1900 in tax subsidy for your policy from your employer. The one that distinguishes you from the moochers who get a government handout, right? But then there’s more.
Disembodied: You live in a state with an income tax, right? Say the tax bracket for your state is 5% for your income. Then the state is giving you a tax subsidy of over $600. That brings your total tax subsidy to about $2500 per year. But then, there’s the FICA tax to consider.
Disembodied: Since your taxable income just went up, you owe social security and medicare tax on this new income. So for $12,600, your tax that you don’t have to pay at all is almost another $1000 per year. And your employer also avoids another $1000 per year that they’d have to pay to match your contribution.
Disembodied: I calculate that due to the way that health care is accounted for in the tax code, your avoided tax is just about $3500 per year, and your employer avoids paying an extra $1000. So I’m glad that you’ve decided not to be a taker of government money, because your government could sure use the extra $4500 that you said you’d be willing to pay.
Disgruntled: Now wait a minute, I never said …
Disembodied: Oh yes you did. You said that you’d never want to be one of the takers who takes a subsidy from the government. That means you want to correct this problem in the tax system. Of course, if you were in a higher tax bracket, like 25%, you’d be getting even more free money from the government.
Disgruntled: You’re using fake facts. You’re probably part of the lying media. I’ve never seen anything about this on Facebook.
Disembodied: Believe what you will. Reality does not change based upon your beliefs. The facts are that you get money from the government to subsidize your health care benefit that you earn. Of course, you still pay all of the out-of-pocket and shared premium as well.
Disgruntled: And they keep going up and up. It’s all due to Obamacare.
Disembodied: Health care costs have been going up faster than inflation for decades before the ACA came into being. One reason is due to the screwy way health care gets paid for. We spend over 25% just on the administration. Funny thing is, when you have a single payer system like Medicare, that administrative burden goes down to about 5%.
Disgruntled: You mean single-payer would cost less? Why don’t we consider it?
Disembodied: Because the 1% class you put into the government believes that only moral reprobates who have immoral habits get diseases or have accidents, and they are the ones who drive up costs for the superior class of folks who have employer-paid health care. Besides, the 1% gets a hell of a lot of tax cuts when the taxes that supported the ACA are backed out.
Disgruntled: Yeah, but isn’t single payer socialism?
Disembodied: You mean the current system that gives free money to taxpayers and employers to have employer-based coverage isn’t socialism? Isn’t that government picking winners and losers? You’re a loser if you work three part time jobs and 60 hours a week but none of your employers provide health care and you don’t deserve any government subsidy? You’re a winner if you work for someone who provides health care as a benefit?
Disgruntled: Nobody knew health care could be so complicated.