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I don't think I fit your description of those who don't like the ACA, but I don't like it none the less. I believe we could fix health care costs by removing j

I don't think I fit your description of those who don't like the ACA, but I don't like it none the less. I believe we could fix health care costs by removing just one law. Stop making health insurance a tax deductible employee benefit. Think critically about the effect that small change would have and you'll see why our system is broken.

dllthomas 13y ago
While I totally agree with your proposed change, I don't think that fixes the system as a whole - especially if it were the only change to the pre-ACA state of affairs.
lewispollard 13y ago
As an interested non-American, how would that change the system?
- IanDrake 13y ago
  In the US, if your employer pays for your health insurance, they pay for it with pre-tax dollars. If you buy it, you buy with post tax dollars. That's why employers pay for it in lieu of paying you more. If your employer pays for your car insurance as a benefit, they pay for it with post tax dollars, so they don't do that. So, employers pay the premium on your health care for the tax advantage. Now consider the how psychology behind not being the one who pays for the premium. Do you care how much your services cost? No. Do you care if the premium goes up? No. Do you shop around for better insurance? No. Do you care if you loose your job if you're sick? Hell yes. In effect all normal market pressures are gone. No one who consumes resources cares about their costs because they're are completely disconnected from paying them or some derivative of them. This is why doctors don't post prices. While the net effect for people with employer provided health insurance is ever increasing rates, the effect on those people without health insurance is brutal. They are trying to enter a market that has no price pressure.
  - lewispollard 13y ago
    So essentially the market for health insurance is competitive on what companies can afford rather than individuals? So the proposed change would force insurance companies to be more competitive on a smaller scale and in the long run, cheaper. Interesting.
- aestra 13y ago
  Health insurance is weird in the US. In World War II we had wage controls which kept wages tight. When the War Labor Board declared that fringe benefits, such as sick leave and health insurance, did not count as wages for the purpose of wage controls, employers responded with significantly increased offers of fringe benefits, especially health care coverage, to attract workers. As a result it became the defacto standard to get your insurance through your employer and your employer picks a company and group plan that spreads the risks over everyone and pays most or all of the premiums with before tax dollars. Employees can usually pick from a few plans (individual or family, maybe two levels of coverage) For example, my employer pays 2/3rds of my premiums and I pay 1/3rd. They would rather give me health insurance than money for my own health insurance because they don't have to pay taxes on the health insurance premiums they pay for me. Nobody gets a choice in what your employer picks as a health insurance. If I wanted my own insurance of my choice I would have to opt out my that extra money my employer kicks into my health insurance (I would lose it, I couldn't apply it to my own plan, and it is a substantial amount of money)
scarmig 13y ago
Sorry, I don't mean to take this out on you in particular. And I'm hardly an ACA fanboy myself. But your comment just goes to show that no one has a clue about what the ACA actually does, and it drives me crazy. The ACA does remove that tax exemption, albeit partially. Every dollar above $10k or so ends up being taxed now. And not a small amount, either: the tax is to the tune of 40%. And since the cost of healthcare will continue to rise faster than inflation for the foreseeable future, more and more employer health plans are going to be hitting that number. I'd certainly prefer the tax exclusion to disappear entirely, but the ACA is nothing if not an attempt to offer coverage to the poor and people with pre-existing conditions while doing the minimum possible to disrupt the healthcare market. That's why it's a bit of a Frankenstein: no one in their ideal world would have chosen the ACA as their ideal policy. But given the set of institutional actors and the setup of our government, it may well be the best that was possible. That's how the Obama administration thought of it, at least. IIRC that tax was actually a pretty nasty fight between the Obama administration and labor unions, who get their members relatively good benefits and will be hit disproportionately by it. And you know what? The tax-free cap may well have been significantly lower with Republican input. But they chose to put 100% of their efforts into making a mediocre law fail than trying to turn it into a good or great one. Apologies for the angry rant.
- IanDrake 13y ago
  Pretty sure that's wrong. Employer premium contributions for employees and their opposite-sex spouses and tax dependents are 100% deductible as business expenses under federal and state tax law. This is true regardless of business type-sole proprietorship, partnership, LLC, corporation, etc. These rules also apply to owners of C corporations and LLCs classified as corporations for tax purposes. These business owners are considered to be employees of the business for purposes of the tax treatment of premium contributions. http://healthcoverageguide.org/reference-guide/laws-and-rights/tax-implications/#Tax-Deductibility+of+Employer%26%238217%3Bs+Premium+Contributions http://healthcoverageguide.org/reference-guide/laws-and-righ...
  - scarmig 13y ago
    No, that website is mistaken, or at least not addressing the same thing we're talking about. http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=99 http://www.healthaffairs.org/healthpolicybriefs/brief.php?br...

dllthomas 13y ago

While I totally agree with your proposed change, I don't think that fixes the system as a whole - especially if it were the only change to the pre-ACA state of affairs.

lewispollard 13y ago

As an interested non-American, how would that change the system?

IanDrake 13y ago
In the US, if your employer pays for your health insurance, they pay for it with pre-tax dollars. If you buy it, you buy with post tax dollars. That's why employers pay for it in lieu of paying you more. If your employer pays for your car insurance as a benefit, they pay for it with post tax dollars, so they don't do that. So, employers pay the premium on your health care for the tax advantage. Now consider the how psychology behind not being the one who pays for the premium. Do you care how much your services cost? No. Do you care if the premium goes up? No. Do you shop around for better insurance? No. Do you care if you loose your job if you're sick? Hell yes. In effect all normal market pressures are gone. No one who consumes resources cares about their costs because they're are completely disconnected from paying them or some derivative of them. This is why doctors don't post prices. While the net effect for people with employer provided health insurance is ever increasing rates, the effect on those people without health insurance is brutal. They are trying to enter a market that has no price pressure.
- lewispollard 13y ago
  So essentially the market for health insurance is competitive on what companies can afford rather than individuals? So the proposed change would force insurance companies to be more competitive on a smaller scale and in the long run, cheaper. Interesting.
aestra 13y ago
Health insurance is weird in the US. In World War II we had wage controls which kept wages tight. When the War Labor Board declared that fringe benefits, such as sick leave and health insurance, did not count as wages for the purpose of wage controls, employers responded with significantly increased offers of fringe benefits, especially health care coverage, to attract workers. As a result it became the defacto standard to get your insurance through your employer and your employer picks a company and group plan that spreads the risks over everyone and pays most or all of the premiums with before tax dollars. Employees can usually pick from a few plans (individual or family, maybe two levels of coverage) For example, my employer pays 2/3rds of my premiums and I pay 1/3rd. They would rather give me health insurance than money for my own health insurance because they don't have to pay taxes on the health insurance premiums they pay for me. Nobody gets a choice in what your employer picks as a health insurance. If I wanted my own insurance of my choice I would have to opt out my that extra money my employer kicks into my health insurance (I would lose it, I couldn't apply it to my own plan, and it is a substantial amount of money)

scarmig 13y ago

Sorry, I don't mean to take this out on you in particular. And I'm hardly an ACA fanboy myself. But your comment just goes to show that no one has a clue about what the ACA actually does, and it drives me crazy. The ACA does remove that tax exemption, albeit partially. Every dollar above $10k or so ends up being taxed now. And not a small amount, either: the tax is to the tune of 40%. And since the cost of healthcare will continue to rise faster than inflation for the foreseeable future, more and more employer health plans are going to be hitting that number. I'd certainly prefer the tax exclusion to disappear entirely, but the ACA is nothing if not an attempt to offer coverage to the poor and people with pre-existing conditions while doing the minimum possible to disrupt the healthcare market. That's why it's a bit of a Frankenstein: no one in their ideal world would have chosen the ACA as their ideal policy. But given the set of institutional actors and the setup of our government, it may well be the best that was possible. That's how the Obama administration thought of it, at least. IIRC that tax was actually a pretty nasty fight between the Obama administration and labor unions, who get their members relatively good benefits and will be hit disproportionately by it. And you know what? The tax-free cap may well have been significantly lower with Republican input. But they chose to put 100% of their efforts into making a mediocre law fail than trying to turn it into a good or great one. Apologies for the angry rant.

IanDrake 13y ago
Pretty sure that's wrong. Employer premium contributions for employees and their opposite-sex spouses and tax dependents are 100% deductible as business expenses under federal and state tax law. This is true regardless of business type-sole proprietorship, partnership, LLC, corporation, etc. These rules also apply to owners of C corporations and LLCs classified as corporations for tax purposes. These business owners are considered to be employees of the business for purposes of the tax treatment of premium contributions. http://healthcoverageguide.org/reference-guide/laws-and-rights/tax-implications/#Tax-Deductibility+of+Employer%26%238217%3Bs+Premium+Contributions http://healthcoverageguide.org/reference-guide/laws-and-righ...
- scarmig 13y ago
  No, that website is mistaken, or at least not addressing the same thing we're talking about. http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=99 http://www.healthaffairs.org/healthpolicybriefs/brief.php?br...