With all the Iraq resolutions and other news items, has anybody really looked at the consequences of Bush's Health Care proposal?
It is the ultimate expression of Rovian/Orwellian Republicanism - It's sold as good for the average taxpayer, but it gives tax breaks to the wealthy and businesses, does nothing for the poor, and is a sneak attack on Social Security and Medicare.
Analysis Below
I've had people ask why poor people tend to remain Democrats. This is a perfect example.
The proposal adds a standard deduction of $15,000 ($7500 if single) of income exempt from both income taxes and Social Security/Medicare payroll taxes for all with health insurance, but the company share of health insurance gets added to your taxable income. So - if your company pays more than $15K for your policy, your taxes go up. Less - and they go down. If you have no company health plan but buy your own, you lose the the itemized deduction for insurance premiums. This will also replace the 'pre-tax' deduction many now get for the employee share of medical and dental premiums. There's also an increase in the amount of money you can shelter from taxes in a Health Savings Account (HSA).
The consequences:
- It hurts workers who have the best health care coverage (mainly unions) since they'll have to pay taxes on the part of their health care insurance over $15,000.
- It's a tax break for most non-union businesses since they won't have to pay matching payroll taxes to Medicare and Social Security on the difference between $15K and the employer share of insurance. The lower the cost of the health plan (which means - the less coverage you get), the bigger the break for the company.
- It's an incentive for companies to drop health care benefits all together, since they'd get roughly a $1000 tax break for every employee who buys their own - not to mention eliminating the company share of your insurance.
- It's a tax break for businesses with a lot of highly paid employees - over the SS limit. Adding insurance to their income doesn't increase the amount of SS taxes, but they don't have to match on the first $15K. Again - about $1000 / employee.
- In conjunction with that, it's a sneak attack on Social Security and Medicare - since it reduces contributions as seen above. If Bush can't destroy Social Security from the front - he'll attack it from behind.
- It's a tax break for the rich since the proposal also increases the tax break for HSA's - (80% of HSA users make over $100K).
- It doesn't do a damned thing for people who are too poor for health insurance in the first place since they pay minimal taxes anyway.
- It cuts the ability of injured people to sue for malpractice, which protects insurance companies and doctors, without cutting costs (estimated at < .5 % of health care).
- It eliminates state control of insurance providers by allowing cross-state alliances of insurers to be exempt from state coverage requirements.
- And it makes it look like Bush is doing something about health care costs, when this does nothing to control costs.
I'm sure there's more I've missed.
The more I think about it, the more clever this appears. A true Orwellian - "less is more" plan.