- Jun 6, 2007
- 853
- 484
- 910
If one really thinks the issues through Union leaders, who have been lobbying Congress heavily in recent days, are right it is a bad idea to tax insurance companies for the "Cadillac" health insurance they sell which the Senate Health Care Reform bill is planning to do. Union leaders correctly state that these taxes in large part will be passed on to the beneficiaries of these insurance plans which are often ordinary workers and it will be passed on in the form of higher premiums or lower or no wage increases over future years and in many cases it will force employers to reduce benefits in health insurance plans which workers though the years have sacrificed to obtain, sacrificed in the form of accepting lower or no wage increases.
What is really telling about this whole issue in union's favor is the characterization of these health insurance plans that are involved. Proponents and advocates for this tax and even the media, probably not intentionally, mischaracterize these health insurance plans. They call these plans "cadillac", "gold plated", "lavish", "premium", etc. plans implying to ordinary members of the public that the beneficiary of these plans are getting medical benefits that are not necessary. This wording is sort of implying recipients of these plans are getting like free plastic surgergy or any type of plasticsurgery coverage. What these plans are in actuality are probably just plans that have an actuarial coverage on benefits of like 80% to 90% as opposed to common health insurance plans that have actuarial coverage of like 60% to 70%. By actuarial coverage it is meant that if a person goes into the hospital and the bill from the hospital is say $50,000.00 the amount of actuarial coverage refers to the percent of the bill a person's insurance company will pay. From a public policy standpoint from a good society standpoint it should be elected leaders ultimate goal to get all Americans where economically feasible plans with high actuarial coverage. In truth, probably the vast majority of health insurance plans the Senate is trying to eliminate with the provisions in this reform bill are actually plans which good Senators would be trying to create. I think the media has a lot of work to do to clarify this issue for the American people, because it sure seems like the American people are being duped here!
The Senate is planning to use this tax on these high coverage plans to pay for the cost of this reform legislation which really doesn't make much sense because the goal of the tax, pursuant to Senate advocates, is to push insurance issuers to scale back these insurance plans to cut the benefits so that the enrollees who would otherwise be in these high coverage plans will use less health care because they are in scaled back plans - it is the Senate's goal here to cut back on overall health care spending in America. Experts estimate that to a large degree the Senate will achieve its goal in so far as getting insurance issuers to scale back their plans so they are not subject to the tax which begs the question how does the Senate intend to pay for the legislation long-term if its revenue generating mechanism is made long-term dramatically less effective.
Nevertheless, the Senate is on to something which could be a good revenue generator on this topic of high coverage plans. High coverage plans obviously cost much more that medium coverage plans in terms of insurance premium costs. Now most Americans don't have high coverage plans because of the premium costs. There are a significant segment of Americans that have these high coverage plans who are also very high income Americans, the media refers to some of these Americans as "fat cat executives". Considering that for these "fat cat executives" and many other very high income Americans who have these high coverage plans and who get their health insurance through their employer they don't pay a red cent more in taxes for these insurance plans that are much better than what ordinary Americans have because to employees what their employer pays for them in health insurance premiums is exempt from taxation, it is basic American tax law. In light of the fact that these very high income Americans have the money to pay taxes on this extraordinary benefit they get from their employer Congress should tax this benefit to the extent that it is extrordinary on these very high income Americans. The bottom line is that the Senate should scrap this initiative to tax insurance companies for high coverage insurance plans and instead tax as ordinary income for very high income Americans the premiums their employers pay for health insurance that exceeds the average premiums that all American employers pay for health insurance premiums. There would be nothing unfair about this to these very high income Americans because they would be still getting to exclude as taxable income the same amount of premium benefit from their employer as ordinary Americans do!
What is really telling about this whole issue in union's favor is the characterization of these health insurance plans that are involved. Proponents and advocates for this tax and even the media, probably not intentionally, mischaracterize these health insurance plans. They call these plans "cadillac", "gold plated", "lavish", "premium", etc. plans implying to ordinary members of the public that the beneficiary of these plans are getting medical benefits that are not necessary. This wording is sort of implying recipients of these plans are getting like free plastic surgergy or any type of plasticsurgery coverage. What these plans are in actuality are probably just plans that have an actuarial coverage on benefits of like 80% to 90% as opposed to common health insurance plans that have actuarial coverage of like 60% to 70%. By actuarial coverage it is meant that if a person goes into the hospital and the bill from the hospital is say $50,000.00 the amount of actuarial coverage refers to the percent of the bill a person's insurance company will pay. From a public policy standpoint from a good society standpoint it should be elected leaders ultimate goal to get all Americans where economically feasible plans with high actuarial coverage. In truth, probably the vast majority of health insurance plans the Senate is trying to eliminate with the provisions in this reform bill are actually plans which good Senators would be trying to create. I think the media has a lot of work to do to clarify this issue for the American people, because it sure seems like the American people are being duped here!
The Senate is planning to use this tax on these high coverage plans to pay for the cost of this reform legislation which really doesn't make much sense because the goal of the tax, pursuant to Senate advocates, is to push insurance issuers to scale back these insurance plans to cut the benefits so that the enrollees who would otherwise be in these high coverage plans will use less health care because they are in scaled back plans - it is the Senate's goal here to cut back on overall health care spending in America. Experts estimate that to a large degree the Senate will achieve its goal in so far as getting insurance issuers to scale back their plans so they are not subject to the tax which begs the question how does the Senate intend to pay for the legislation long-term if its revenue generating mechanism is made long-term dramatically less effective.
Nevertheless, the Senate is on to something which could be a good revenue generator on this topic of high coverage plans. High coverage plans obviously cost much more that medium coverage plans in terms of insurance premium costs. Now most Americans don't have high coverage plans because of the premium costs. There are a significant segment of Americans that have these high coverage plans who are also very high income Americans, the media refers to some of these Americans as "fat cat executives". Considering that for these "fat cat executives" and many other very high income Americans who have these high coverage plans and who get their health insurance through their employer they don't pay a red cent more in taxes for these insurance plans that are much better than what ordinary Americans have because to employees what their employer pays for them in health insurance premiums is exempt from taxation, it is basic American tax law. In light of the fact that these very high income Americans have the money to pay taxes on this extraordinary benefit they get from their employer Congress should tax this benefit to the extent that it is extrordinary on these very high income Americans. The bottom line is that the Senate should scrap this initiative to tax insurance companies for high coverage insurance plans and instead tax as ordinary income for very high income Americans the premiums their employers pay for health insurance that exceeds the average premiums that all American employers pay for health insurance premiums. There would be nothing unfair about this to these very high income Americans because they would be still getting to exclude as taxable income the same amount of premium benefit from their employer as ordinary Americans do!
