Tag: Health Insurance

Are You Calling Me A Socialist?

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I’m doing something I’ve not done before in this blog. I am reprising one of my old posts. I wrote this back in May of 2017, but it is still valid. Some of the figures may have changed over the years, but the sentiments are just as valid today as when I wrote it.

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?

Disgruntled: Yeah.

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?

Disgruntled: Yeah.

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.

Disgruntled: 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.

Disgruntled: What?

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.

Disgruntled: Ouch!

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.

Transition to Medicare

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health insurance

There must be one heck of a lot of money to be made in signing people up for Medicare Advantage and/or Medigap policies. Otherwise, I would not have been subjected to literally hundreds of phone calls over recent months leading up to my 65th birthday. I have been extremely fortunate, having held family health insurance since retiring from my corporate job nearly 5 years ago. So I had been insulated from any external sales pressure trying to entice me to buy health insurance. That ended this year, when hordes descended on my phone lines (both land-line and cell), attempting to get me to establish a relationship with someone who cold-called me asking if they could be my friend to assist me in choosing Medicare supplemental insurance coverage.

I was fortunate in that my employer, anxious to shed me from their legacy cost structure, offered both a stipend for ongoing medical insurance, and the assistance of a contractor that steered me through the enrollment process. The stipend will not cover the total amount of Medigap and Medicare part D insurance, but it will pay a good portion of it. I am now through the process, although I now am vulnerable to the annual enrollment period for Medicare recipients where I can change my supplemental carrier, if I so desire. Having had all of 2 months of coverage, so far I do not have adequate experience to want to change carriers.

The summer months, though, were filled with calls asking if I needed assistance. It became obvious that the coverage rates were high enough to justify scores of call centers placing calls to me, solely because I was identifiable in their databases as a 64 year old and therefore needing their assistance. The best one was one that my wife fielded when I was not available, where they asked her if she was the one in the family who made health care decisions. We are phone luddites, with both a land line and cell phones, and the land line does not have caller ID, so any call was at least answered. In most cases when I could learn their purpose in calling me, I said firmly but politely, “I’m sorry, I’m not interested,” then hung up before someone could begin their sales pitch. I feel sorry for those whose job is in a call center, since they encounter the worst of humanity. I definitely do not wish to inflict them with additional angst from an uninterested caller.

What is interesting in this day is that we are hearing a call for adoption of a Medicare for All program as part of several candidate’s platforms. These platforms also call for the abolishment of private health insurance as part of an implementation plan to convert to a single-payer system. Well, the current Medicare system certainly has room for private insurance plans to fill in the gaps around the basic core. And it is clear that a government mandate to forcibly give up current insurance coverage, however inadequate it has become due to higher deductibles and higher copayments, will create significant resistance among many American voters. What would seem to be a better way would be to create an alternative option for health care coverage. For those who currently hold health insurance, a mandate could be placed upon employers that they offer the public option as one of the available options for employees to choose, and that employers have to provide a subsidy equivalent to what they are providing with their current insurance package. Then the public option would be enabled to begin to unravel the excessive overhead found in current for-profit insurance coverage. Over time, this will result in the public option costing employees less, while providing better coverage due to reduced deductibles and co-payments.

For those who do not currently have employer-based health insurance, this public option would be placed upon the health care exchanges, and people would be able to select a plan with greatly-reduced premiums. If the marketplace is allowed to function properly, the competition from a public option will result in insurance providers trying to match the public pricing. The cost for health care will bend lower over time, and if the public option ends up becoming the preferred option, then we may find ourselves in a situation where a Medicare for All system is the de facto choice, without it ever being mandated as a de jure choice.

The march towards progressivism in the Democratic party at present has flaws built into its logic. It presumes that there is such a pent-up demand for their prescriptive solutions to the ailments of our society that this nation will choose a mandated big-government program. My fear is that if such a proposal is adopted officially by the Democratic nominee, the disgust that permeates US society towards Federal Government mandates will result in the re-election of the current President. That would be the greatest tragedy of all.