Wednesday, September 16, 2009

The Baucus/Senate Health Plan

Senator Max Baucus released the Senate version of a health care proposal today, and the New York Times said it "meets many of the requirements that President Obama laid out in his address to Congress last week."

What shocks me about the Baucus bill is the 35% tax on health coverage over certain amounts -- $21,000 for a family. The Times reports this, misleadingly of course, as follows:
"...the proposal would impose a new, 35 percent excise tax on the most expensive group insurance plans, those costing more than $8,000 for individuals and $21,000 for families."

Actually, the language of the proposal makes it abundantly clear that the total amount to be considered as the "limit" includes the total cost of health insurance provided to employees, whether they pay for it directly or the employer does, PLUS any dental, vision or other health coverage, PLUS the amount that an employee or the employer deposits into a Flexible Spending Account.

This year at Dartmouth the most expensive family health coverage costs $18,300. Add to that $1850 for dental coverage and the maximum $5,000 flexible spending employee contribution and you get $25,154. With a 35% surtax on the excess over $21,000, that means someone (look in the mirror) will end up paying about $1450 in additional tax (or change their health coverage). So now we know what the folks in DC consider to be a "gold-plated" insurance plan -- look no further than your own.

The President and others have been very vocal on how their proposals will not require those with insurance to change anything. In the President's words to Congress the other night: "Let me repeat this: nothing in our plan requires you to change what you have."

OK, so if someone holds a gun to my head and says, give me $1500 -- does that mean they aren't requiring me to change anything I do?

One might think that since health care benefits are provided taxfree right now, that starting to tax them is perfectly fine. In principle, yes. But not in this piecemeal, add-on, excise tax fashion!! If you want to really improve the health care insurance situation, sever the cord binding employees to get their insurance from their employer by giving the employee a tax credit for insurance no matter who they get it from. In the process, if we limit the tax deduction to a certain amount, I could live with that.

And I have just begun to read the Baucus plan. No doubt new gems lie to be discovered.

1 comment:

T'11 said...

Hopefully SOMEWHERE in there it suggests setting MR = MC