(your employer gives you a chunk of money towards an exchange plan rather than having their own group policy, say)
What if
and just hear me out on this
We remove the requirement for employers to pay anything?
That would, like, you know, reduce the cost of doing business and stimulate job growth, yes?
And we could pair with a tax increase on, say, the wealthiest 0.5% to make up the difference, and pay it directly out of the government instead.
You mean what if you cut my compensation by 10-15%? I would not be particularly happy about that.
What?
No?
What?
The argument employers are making now is that since healthcare is subsidized by them, it's considered part of your compensation. like, literally my employer shows me how much they spend on my healthplan as part of my "total compensation." basically it's their way of saying they pay me more than I get in my paycheck (which isn't wrong, if, say I had to pay for my own healthcare).
Right, so if they didn't have to spend it on your healthcare, they could pay you more.
Except employers concerned with their bottom line as opposed to their employees wouldn't increase wages, as healthcare has different tax benefits.
(your employer gives you a chunk of money towards an exchange plan rather than having their own group policy, say)
What if
and just hear me out on this
We remove the requirement for employers to pay anything?
That would, like, you know, reduce the cost of doing business and stimulate job growth, yes?
And we could pair with a tax increase on, say, the wealthiest 0.5% to make up the difference, and pay it directly out of the government instead.
You mean what if you cut my compensation by 10-15%? I would not be particularly happy about that.
What?
No?
What?
The argument employers are making now is that since healthcare is subsidized by them, it's considered part of your compensation. like, literally my employer shows me how much they spend on my healthplan as part of my "total compensation." basically it's their way of saying they pay me more than I get in my paycheck (which isn't wrong, if, say I had to pay for my own healthcare).
Right, so if they didn't have to spend it on your healthcare, they could pay you more.
Except employers concerned with their bottom line as opposed to their employees wouldn't increase wages, as healthcare has different tax benefits.
Wages are depressed for a reason.
Also, employers get a tax benefit for paying their share. That tax benefit disappears if they pay it directly to the employee.
This tax benefit is the main reason you can't say to your employer "no thanks on that insurance, I'll just take the money and buy and Exchange plan please" and have them agree. The other reason is that if you did, all the other healthy people also would, and then the cost of the group plan would go up so much that no one would be able to afford it.
(your employer gives you a chunk of money towards an exchange plan rather than having their own group policy, say)
What if
and just hear me out on this
We remove the requirement for employers to pay anything?
That would, like, you know, reduce the cost of doing business and stimulate job growth, yes?
And we could pair with a tax increase on, say, the wealthiest 0.5% to make up the difference, and pay it directly out of the government instead.
You mean what if you cut my compensation by 10-15%? I would not be particularly happy about that.
What?
No?
What?
The argument employers are making now is that since healthcare is subsidized by them, it's considered part of your compensation. like, literally my employer shows me how much they spend on my healthplan as part of my "total compensation." basically it's their way of saying they pay me more than I get in my paycheck (which isn't wrong, if, say I had to pay for my own healthcare).
Right, so if they didn't have to spend it on your healthcare, they could pay you more.
Except employers concerned with their bottom line as opposed to their employees wouldn't increase wages, as healthcare has different tax benefits.
Wages are depressed for a reason.
Also, employers get a tax benefit for paying their share. That tax benefit disappears if they pay it directly to the employee.
This tax benefit is the main reason you can't say to your employer "no thanks on that insurance, I'll just take the money and buy and Exchange plan please" and have them agree. The other reason is that if you did, all the other healthy people also would, and then the cost of the group plan would go up so much that no one would be able to afford it.
This whole thing sounds like a capitalist suicide pact: "Let's distort every part of the market by removing all price elasticity from the system, and then incentivize everybody to keep the same system forever!"
(your employer gives you a chunk of money towards an exchange plan rather than having their own group policy, say)
What if
and just hear me out on this
We remove the requirement for employers to pay anything?
That would, like, you know, reduce the cost of doing business and stimulate job growth, yes?
And we could pair with a tax increase on, say, the wealthiest 0.5% to make up the difference, and pay it directly out of the government instead.
You mean what if you cut my compensation by 10-15%? I would not be particularly happy about that.
What?
No?
What?
The argument employers are making now is that since healthcare is subsidized by them, it's considered part of your compensation. like, literally my employer shows me how much they spend on my healthplan as part of my "total compensation." basically it's their way of saying they pay me more than I get in my paycheck (which isn't wrong, if, say I had to pay for my own healthcare).
Right, so if they didn't have to spend it on your healthcare, they could pay you more.
Except employers concerned with their bottom line as opposed to their employees wouldn't increase wages, as healthcare has different tax benefits.
Wages are depressed for a reason.
Also, employers get a tax benefit for paying their share. That tax benefit disappears if they pay it directly to the employee.
This tax benefit is the main reason you can't say to your employer "no thanks on that insurance, I'll just take the money and buy and Exchange plan please" and have them agree. The other reason is that if you did, all the other healthy people also would, and then the cost of the group plan would go up so much that no one would be able to afford it.
This whole thing sounds like a capitalist suicide pact: "Let's distort every part of the market by removing all price elasticity from the system, and then incentivize everybody to keep the same system forever!"
McCain's plan back when he was running against Obama was basically "delete the employer tax benefit, tell them to pay people that money instead or else, subsidize the people who get too little, sell plans across state lines, job done."
Idk if it would have worked but he gets points for trying to decouple insurance and employment.
(your employer gives you a chunk of money towards an exchange plan rather than having their own group policy, say)
What if
and just hear me out on this
We remove the requirement for employers to pay anything?
That would, like, you know, reduce the cost of doing business and stimulate job growth, yes?
And we could pair with a tax increase on, say, the wealthiest 0.5% to make up the difference, and pay it directly out of the government instead.
You mean what if you cut my compensation by 10-15%? I would not be particularly happy about that.
What?
No?
What?
The argument employers are making now is that since healthcare is subsidized by them, it's considered part of your compensation. like, literally my employer shows me how much they spend on my healthplan as part of my "total compensation." basically it's their way of saying they pay me more than I get in my paycheck (which isn't wrong, if, say I had to pay for my own healthcare).
Right, so if they didn't have to spend it on your healthcare, they could pay you more.
Except employers concerned with their bottom line as opposed to their employees wouldn't increase wages, as healthcare has different tax benefits.
Wages are depressed for a reason.
Also, employers get a tax benefit for paying their share. That tax benefit disappears if they pay it directly to the employee.
This tax benefit is the main reason you can't say to your employer "no thanks on that insurance, I'll just take the money and buy and Exchange plan please" and have them agree. The other reason is that if you did, all the other healthy people also would, and then the cost of the group plan would go up so much that no one would be able to afford it.
This whole thing sounds like a capitalist suicide pact: "Let's distort every part of the market by removing all price elasticity from the system, and then incentivize everybody to keep the same system forever!"
Like healthcare reform, removing the loophole created by the post-WWII anti-inflation measure is hard to do once the public gets used to it.
Marty: The future, it's where you're going? Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
(your employer gives you a chunk of money towards an exchange plan rather than having their own group policy, say)
What if
and just hear me out on this
We remove the requirement for employers to pay anything?
That would, like, you know, reduce the cost of doing business and stimulate job growth, yes?
And we could pair with a tax increase on, say, the wealthiest 0.5% to make up the difference, and pay it directly out of the government instead.
You mean what if you cut my compensation by 10-15%? I would not be particularly happy about that.
What?
No?
What?
The argument employers are making now is that since healthcare is subsidized by them, it's considered part of your compensation. like, literally my employer shows me how much they spend on my healthplan as part of my "total compensation." basically it's their way of saying they pay me more than I get in my paycheck (which isn't wrong, if, say I had to pay for my own healthcare).
Right, so if they didn't have to spend it on your healthcare, they could pay you more.
Hahaha, yeah right, in what world would a company take the money they're putting into healthcare and pay it to you instead if they didn't have to? Your salary remains the same and you still have healthcare (now thanks to the government instead of them) so to them it's a bonus in their pocket, not yours. Realistically the government would need to take the money your company's paying into healthcare in the form of taxes so they could fund that healthcare, the only difference being that unemployed people would have access to care.
What is the Democratic party platform on tax exemption for employer based healthcare fringe?
Marty: The future, it's where you're going? Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
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ElldrenIs a woman dammitceterum censeoRegistered Userregular
As a non-US person, can someone explain why on earth your healthcare is provided by your employer? It sounds really weird. How do they decide how much of it they cover, or if they even do it at all? Is it something that grew up over the last couple of centuries in the US, or is it more recent?
Because the healthcare system in the US is fundamentally broken and the fact that employers are involved in it on any level is one of the largest cracks in the concrete
The failure state of Obamacare is that the carrot and stick of the subsidy and penalty are unable to goad healthy people into buying comprehensive insurance packages, and the result is that the healthiest people flee the exchanges, leading prices to raise to reflect the sicker status of the remainders, leading the slightly less healthy people to flee too, and so on in a vicious feedback cycle the progressively pushes up the price of insurance until no one is willing to buy at a price insurers are willing to sell.
If that was allowed to happen with no intervention whatsoever, then it would plausibly be worse than the pre-ACA status quo. But it would in any case be a national catastrophe and pretty fully deserving the term "failure state." And it looked like it might well be happening, at the beginning. But the exchanges are more stable now.
What is the subsidy? As above: healthy people don't, on their own, want to buy insurance at a price insurers are willing to sell insurance to community-rated pools that include the sick. To get the healthy to buy in to those more expensive, sicker pools, Obamacare gives them a subsidy. This keeps them participating, and lets the insurers charge enough to make enough money to cover the sick. But notice what this does. It is the government as the original source of money, giving it to individuals on the condition that they then give it to insurance companies, under the understanding that insurance companies can then spend it on caring for the sick. The government is paying for the care of those individuals. It is just routing it through two pass-throughs: first, healthy individuals, and second, the insurance companies. If it pays for the care of the sick, one wonders why it cannot just pay for the care of the sick.
Note that this is not also true for the penalty. The penalty in effect is a cudgel which forces healthy people to cross-subsidize the sick out of their own pockets. But, by contrast, the subsidy really is just the government itself coughing up the financing for the care of the sick.
One reason to give in defense of this sort of subcontracting is that it nets efficiency gains as insurers compete. But this theoretical benefit certainly hasn't manifested much, as exchanges struggle to support a range of plans. Even if there were more competition, though, the notion that it will help much runs up against the problems that 1) there is zero evidence that people are good at comparison health shopping, and plenty of reason to think that they really aren't, and 2) competition between plans at various levels of benefits is the very thing that creates adverse selection in the first place, as healthy people have strong incentives to flee to the most barebones plan, which again increases the cost of providing the more comprehensive plans.
Prices going up really is a problem with the ACA specifically. The actual cost of providing care to the sick is astronomical in the US system. And the consequence of those astronomical real costs is that as soon as they start getting priced into healthy people's insurance premiums, those healthy people are strongly incentivized to bug the fuck out. But that's the whole idea of the competitive insurance exchange market as combined with community rated risk pools: the healthy get the care of the sick priced into their premiums. That model just doesn't work without some way to control exploding costs for the sick.
If real costs continue to increase without bound, then the options within the ACA framework are either 1) the subsidy goes up to keep insurance affordable (in which case the government is just eating the cost), or 2) the penalty goes up (in which case the healthy are being coerced into large, visible cross-subsidies), or 3) adverse selection fully kicks in and the thing explodes. I take it that 3 is generally unacceptable, that 2 is politically unacceptable, for good reasons, and so that we are just left with 1. But 1 is a lot like single payer, insofar as the ultimate source of financing the care of the sick increasingly becomes the federal government. But although it's a lot like single payer insofar as one person does most of the paying, it's a single payer which doesn't exercise any discretion about how much it spends or on what. This is not ideal.
I'm not doomsaying here, and, of course, politics were quite relevant to the bill that could ultimately pass. I believe Obamacare was a noble improvement on the ex ante status quo. Rather: there are real questions about the benefits of the particular competitive insurance model they're going for, and that those questions are themselves deeply related to its ability to control costs as implemented in the American context (so costs are most definitely not beside the point). As far as I can tell, it's looking okay in the short term, but the jury's out for the medium-to-long term. My general sense from people who do health economics and policy is that no one thinks the US system under the ACA does anything like a good job of health resource allocation or priority setting, but yet, the prevailing sentiment is still that the ex ante status quo and the AHCA were such ridiculous trash fires that the ACA at least seems sane by comparison.
Well, realistically, the defences of the setup as it exists in the US are entirely ideological (many people adverse to "government takeover" of healthcare or whatever) and political (switching away from the system is likely politically impossible, at least any time in the near future). I'm not sure there's ever been anyone pushing for the current system on the grounds that "Hey, this evidence here shows that the current setup is actually good!".
Actually, the employer based system grew out of a loophole from a post WWII effort to stop inflation by capping wages. Employers couldn't pay higher salaries for better talent, so they started getting around the cap by comping health and other benefits.
This worked well as long as people stayed with one employer their entire career and were employed by companies instead of freelancing. By the time job mobility and alternative employment made this system obsolete, pro-labor groups had gotten so used to employment-based fringe benefits that this custom became impossible to remove.
Now we're in a situation where there is no money or infrastructure for an employment independent system, because nobody wants to pay more money for a while to set it up, and the educated people who have the capability to lead the charge have good employer provided insurance and would be acting against their own short term interests.
It's hard to construct an argument that changing the system would benefit the individual. Because it generally won't. It's good for society over the long term, but taking away fringe is like outlawing tips or repealing the ACA.
Marty: The future, it's where you're going? Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
Come to think of it - I don't even know what my health insurance covers and what it doesn't cover. And I don't know who decided what goes into the insurance plan.
That is kinda weird - then again, I don't have to go find an insurance plan myself.
The law has its problems — but it is far from "exploding," using any reasonable definition of the word. Here is a quick rundown of where the Affordable Care Act stands right now, what's going well and what's not so great.
The article is very general, but I think it serves the purpose I need. Namely, I see little political cost in not fixing Obamacare immediately. Yes, it will need fixing in the future and that will no doubt be difficult to push through, but it does not have to be the number one priority.
Thank you everyone who posted replies to the questions I asked.
Trump and co can, and probably will, either do nothing to address existing issues with the ACA or will actively undermine it. This is somewhat more subtle than passing the AHCA, so I don't have a ton of confidence the electorate will notice. This tack would end up literally killing people out of spite, so ... par for the course.
Come to think of it - I don't even know what my health insurance covers and what it doesn't cover. And I don't know who decided what goes into the insurance plan.
That is kinda weird - then again, I don't have to go find an insurance plan myself.
Most employer plans will have some coverage for basically any kind of non-elective medical care.
Even on a HDHP you get to pay their negotiated rates instead of the (silly) "list" prices, for example.
Trump and co can, and probably will, either do nothing to address existing issues with the ACA or will actively undermine it. This is somewhat more subtle than passing the AHCA, so I don't have a ton of confidence the electorate will notice. This tack would end up literally killing people out of spite, so ... par for the course.
I mean, they already decided to waste gov't money by not airing ads that were recorded and had time slots purchased out of spite.
So it's more like 'Trump and co are already actively undermining it'
Because of the loss of the tax benefit, it's quite expensive for an employer to give you the money instead.
Also don't forget the ACA requires that they offer you a plan. Massive opting out is really bad for a company financially.
They don't need to give you money though. You could just increase the Medicare payroll tax on the employer by approximately the amount most companies pay for insurance and fund single payer that way. Taxes would still probably need to increase to cover everyone not employed, which would be a hard sell but it would be significantly lower structured this way.
Because of the loss of the tax benefit, it's quite expensive for an employer to give you the money instead.
Also don't forget the ACA requires that they offer you a plan. Massive opting out is really bad for a company financially.
They don't need to give you money though. You could just increase the Medicare payroll tax on the employer by approximately the amount most companies pay for insurance and fund single payer that way. Taxes would still probably need to increase to cover everyone not employed, which would be a hard sell but it would be significantly lower structured this way.
Well, that would redirect the employer insurance money (sort of - it's not a uniform amount across companies) but it doesn't solve the loss of the corporate tax break, which is a significant cost, and it doesn't solve the employee portion ($over 3600/year for me) or the deductible ($5400 for my family, per year!).
So you are talking about increasing taxes on individuals and companies, wiping out a negotiated benefit for employees with no compensation, and still charging individuals for coverage. Is that right?
(your employer gives you a chunk of money towards an exchange plan rather than having their own group policy, say)
What if
and just hear me out on this
We remove the requirement for employers to pay anything?
That would, like, you know, reduce the cost of doing business and stimulate job growth, yes?
And we could pair with a tax increase on, say, the wealthiest 0.5% to make up the difference, and pay it directly out of the government instead.
You mean what if you cut my compensation by 10-15%? I would not be particularly happy about that.
What?
No?
What?
The argument employers are making now is that since healthcare is subsidized by them, it's considered part of your compensation. like, literally my employer shows me how much they spend on my healthplan as part of my "total compensation." basically it's their way of saying they pay me more than I get in my paycheck (which isn't wrong, if, say I had to pay for my own healthcare).
Right, so if they didn't have to spend it on your healthcare, they could pay you more.
Except employers concerned with their bottom line as opposed to their employees wouldn't increase wages, as healthcare has different tax benefits.
Wages are depressed for a reason.
Also, employers get a tax benefit for paying their share. That tax benefit disappears if they pay it directly to the employee.
This tax benefit is the main reason you can't say to your employer "no thanks on that insurance, I'll just take the money and buy and Exchange plan please" and have them agree. The other reason is that if you did, all the other healthy people also would, and then the cost of the group plan would go up so much that no one would be able to afford it.
This whole thing sounds like a capitalist suicide pact: "Let's distort every part of the market by removing all price elasticity from the system, and then incentivize everybody to keep the same system forever!"
McCain's plan back when he was running against Obama was basically "delete the employer tax benefit, tell them to pay people that money instead or else, subsidize the people who get too little, sell plans across state lines, job done."
Idk if it would have worked but he gets points for trying to decouple insurance and employment.
if you decoupled insurance from employment and the average worker realized how much they really paid for health insurance we'd have single payer yesterday, because that tax would suddenly not seem so huge
"here's a $15,000 a year raise! now you spend $15,000 more on health insurance"
Because of the loss of the tax benefit, it's quite expensive for an employer to give you the money instead.
I don't believe this is true. Payroll is fully deductible. The issue is that I'd be a fucking moron to take the money because I'd never find a comparable plan for less as a single entity looking for insurance. If my company wanted to get out of insuring its employees, it'd have to pay us 3 times what it pays for health care, at least. It's not a tax issue, it's a buying power issue. You get more health care for less money bargaining as a group.
Because of the loss of the tax benefit, it's quite expensive for an employer to give you the money instead.
I don't believe this is true. Payroll is fully deductible. The issue is that I'd be a fucking moron to take the money because I'd never find a comparable plan for less as a single entity looking for insurance. If my company wanted to get out of insuring its employees, it'd have to pay us 3 times what it pays for health care, at least. It's not a tax issue, it's a buying power issue. You get more health care for less money bargaining as a group.
er, I'm pretty sure health benefits also don't trigger payroll taxes
so if they were spending 2k a year on your health plan they can't just give you a 2k raise and keep the budget flat
i'd be 2k minus the employer share of the payroll tax that you normally never see or think about
life's a game that you're bound to lose / like using a hammer to pound in screws
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
Because of the loss of the tax benefit, it's quite expensive for an employer to give you the money instead.
I don't believe this is true. Payroll is fully deductible. The issue is that I'd be a fucking moron to take the money because I'd never find a comparable plan for less as a single entity looking for insurance. If my company wanted to get out of insuring its employees, it'd have to pay us 3 times what it pays for health care, at least. It's not a tax issue, it's a buying power issue. You get more health care for less money bargaining as a group.
In theory, it would be so that the government could give you health care, or a private but massively regulated mandate that functioned similarly. I don't think anyone who is proposing removing health care from employment is doing so while also leaving the current system in place, because yea that'd end up worse for a lot of people.
It literally doesn't work like that because what they show you on the paycheck isn't what it actually costs them. Just because the employer "spent" 15k subsidizing your healthcare, it's not actually worth 15k to them. They're not going to give the money to you.
Because of the loss of the tax benefit, it's quite expensive for an employer to give you the money instead.
I don't believe this is true. Payroll is fully deductible. The issue is that I'd be a fucking moron to take the money because I'd never find a comparable plan for less as a single entity looking for insurance. If my company wanted to get out of insuring its employees, it'd have to pay us 3 times what it pays for health care, at least. It's not a tax issue, it's a buying power issue. You get more health care for less money bargaining as a group.
It is true though - the employer can deduct 100% of the money they spend on health benefits from their tax bill. Moreover, that value is not taxable income for the employee either, so removing it would constitute a tax increase (as the current benefit is tax-free, but an equivalent benefit would be purchased with taxable income if first paid to the employee).
yes, you get more for less (in theory, assuming your group is large) by opting into the employer plan but there's nothing to suggest that co-ops or other group negotiated insurance offerings would be unavailable if employer decoupling happened.
I could afford a platinum no-deductible plan on the TX exchange if my employer gave me the money they give to Cigna right now. They won't do it though, because that'd be taxable money. Also because everyone in my income bracket would bail out of the insurance, it'd be unsustainable and too expensive for the entry level employees, and the company would be on the hook regardless because they have to offer something to everyone.
Currently, employers' spending on health insurance premiums is exempt from taxation for both employers and employees. Premiums paid by employees are exempt as well if the firm has established a Section 125 cafeteria plan; roughly 80 percent of employees with insurance have such a plan. This tax exclusion is extremely costly - it reduces federal and state tax revenues by $260 Billion per year and is the government's third largest expenditure on health care, after Medicare ($400 Billion) and Medicaid ($300 Billion).
...
Next, the author simulates a policy of removing the tax exclusion for employers but continuing to allow an exclusion for section 125 spending. This policy is estimated to raise $184 Billion, versus $263 Billion from full repeal [of the employer benefit].
Because of the loss of the tax benefit, it's quite expensive for an employer to give you the money instead.
I don't believe this is true. Payroll is fully deductible. The issue is that I'd be a fucking moron to take the money because I'd never find a comparable plan for less as a single entity looking for insurance. If my company wanted to get out of insuring its employees, it'd have to pay us 3 times what it pays for health care, at least. It's not a tax issue, it's a buying power issue. You get more health care for less money bargaining as a group.
It is true though - the employer can deduct 100% of the money they spend on health benefits from their tax bill. Moreover, that value is not taxable income for the employee either, so removing it would constitute a tax increase (as the current benefit is tax-free, but an equivalent benefit would be purchased with taxable income if first paid to the employee).
yes, you get more for less (in theory, assuming your group is large) by opting into the employer plan but there's nothing to suggest that co-ops or other group negotiated insurance offerings would be unavailable if employer decoupling happened.
I could afford a platinum no-deductible plan on the TX exchange if my employer gave me the money they give to Cigna right now. They won't do it though, because that'd be taxable money. Also because everyone in my income bracket would bail out of the insurance, it'd be unsustainable and too expensive for the entry level employees, and the company be on the hook regardless because they have to offer something to everyone.
Currently, employers' spending on health insurance premiums is exempt from taxation for both employers and employees. Premiums paid by employees are exempt as well if the firm has established a Section 125 cafeteria plan; roughly 80 percent of employees with insurance have such a plan. This tax exclusion is extremely costly - it reduces federal and state tax revenues by $260 Billion per year and is the government's third largest expenditure on health care, after Medicare ($400 Billion) and Medicaid ($300 Billion).
...
Next, the author simulates a policy of removing the tax exclusion for employers but continuing to allow an exclusion for section 125 spending. This policy is estimated to raise $184 Billion, versus $263 Billion from full repeal [of the employer benefit].
I understand this, my point was that the tax benefit pales in comparison to the wage depression. My health plan is way more valuable to me than to my employer. If you're able to find a plan on the exchange that beats what your job gives and costs less, the exchanges are working better than I'd thought.
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JuliusCaptain of Serenityon my shipRegistered Userregular
Because of the loss of the tax benefit, it's quite expensive for an employer to give you the money instead.
I don't believe this is true. Payroll is fully deductible. The issue is that I'd be a fucking moron to take the money because I'd never find a comparable plan for less as a single entity looking for insurance. If my company wanted to get out of insuring its employees, it'd have to pay us 3 times what it pays for health care, at least. It's not a tax issue, it's a buying power issue. You get more health care for less money bargaining as a group.
It is true though - the employer can deduct 100% of the money they spend on health benefits from their tax bill. Moreover, that value is not taxable income for the employee either, so removing it would constitute a tax increase (as the current benefit is tax-free, but an equivalent benefit would be purchased with taxable income if first paid to the employee).
yes, you get more for less (in theory, assuming your group is large) by opting into the employer plan but there's nothing to suggest that co-ops or other group negotiated insurance offerings would be unavailable if employer decoupling happened.
I could afford a platinum no-deductible plan on the TX exchange if my employer gave me the money they give to Cigna right now. They won't do it though, because that'd be taxable money. Also because everyone in my income bracket would bail out of the insurance, it'd be unsustainable and too expensive for the entry level employees, and the company be on the hook regardless because they have to offer something to everyone.
Currently, employers' spending on health insurance premiums is exempt from taxation for both employers and employees. Premiums paid by employees are exempt as well if the firm has established a Section 125 cafeteria plan; roughly 80 percent of employees with insurance have such a plan. This tax exclusion is extremely costly - it reduces federal and state tax revenues by $260 Billion per year and is the government's third largest expenditure on health care, after Medicare ($400 Billion) and Medicaid ($300 Billion).
...
Next, the author simulates a policy of removing the tax exclusion for employers but continuing to allow an exclusion for section 125 spending. This policy is estimated to raise $184 Billion, versus $263 Billion from full repeal [of the employer benefit].
I understand this, my point was that the tax benefit pales in comparison to the wage depression. My health plan is way more valuable to me than to my employer. If you're able to find a plan on the exchange that beats what your job gives and costs less, the exchanges are working better than I'd thought.
insurance companies also know that employer money is tax deductible. they can charge more.
Because of the loss of the tax benefit, it's quite expensive for an employer to give you the money instead.
I don't believe this is true. Payroll is fully deductible. The issue is that I'd be a fucking moron to take the money because I'd never find a comparable plan for less as a single entity looking for insurance. If my company wanted to get out of insuring its employees, it'd have to pay us 3 times what it pays for health care, at least. It's not a tax issue, it's a buying power issue. You get more health care for less money bargaining as a group.
It is true though - the employer can deduct 100% of the money they spend on health benefits from their tax bill. Moreover, that value is not taxable income for the employee either, so removing it would constitute a tax increase (as the current benefit is tax-free, but an equivalent benefit would be purchased with taxable income if first paid to the employee).
yes, you get more for less (in theory, assuming your group is large) by opting into the employer plan but there's nothing to suggest that co-ops or other group negotiated insurance offerings would be unavailable if employer decoupling happened.
I could afford a platinum no-deductible plan on the TX exchange if my employer gave me the money they give to Cigna right now. They won't do it though, because that'd be taxable money. Also because everyone in my income bracket would bail out of the insurance, it'd be unsustainable and too expensive for the entry level employees, and the company be on the hook regardless because they have to offer something to everyone.
Currently, employers' spending on health insurance premiums is exempt from taxation for both employers and employees. Premiums paid by employees are exempt as well if the firm has established a Section 125 cafeteria plan; roughly 80 percent of employees with insurance have such a plan. This tax exclusion is extremely costly - it reduces federal and state tax revenues by $260 Billion per year and is the government's third largest expenditure on health care, after Medicare ($400 Billion) and Medicaid ($300 Billion).
...
Next, the author simulates a policy of removing the tax exclusion for employers but continuing to allow an exclusion for section 125 spending. This policy is estimated to raise $184 Billion, versus $263 Billion from full repeal [of the employer benefit].
I understand this, my point was that the tax benefit pales in comparison to the wage depression. My health plan is way more valuable to me than to my employer. If you're able to find a plan on the exchange that beats what your job gives and costs less, the exchanges are working better than I'd thought.
the platinum BCBS plan, last time I looked, costs ~$1100/mo for a family, which is approx $200/mo more than what I + my employer pay, and has no deductible so I would end up saving money, but I cannot get the employer paid portion.
Maybe I'm misunderstanding because I'm not an economics, but I don't get why the relative value has any bearing. If my employer gave me the $600/mo, they would pay taxes on that money and I would pay taxes on that money. That tax burden comes to ~$260 billion nationally. That tax burden is a disincentive, the primary disincentive, to just giving me the money.
How about this as an intermediary step for decoupling employment from health insurance. Everyone gets a HSA style pre-tax account that employer dollars get and can get deposited in. Employee can then use HSA funds to pay for premiums.
Employers can continue dodging taxes, employees can purchase any plan they want from any source.
Because of the loss of the tax benefit, it's quite expensive for an employer to give you the money instead.
I don't believe this is true. Payroll is fully deductible. The issue is that I'd be a fucking moron to take the money because I'd never find a comparable plan for less as a single entity looking for insurance. If my company wanted to get out of insuring its employees, it'd have to pay us 3 times what it pays for health care, at least. It's not a tax issue, it's a buying power issue. You get more health care for less money bargaining as a group.
It is true though - the employer can deduct 100% of the money they spend on health benefits from their tax bill. Moreover, that value is not taxable income for the employee either, so removing it would constitute a tax increase (as the current benefit is tax-free, but an equivalent benefit would be purchased with taxable income if first paid to the employee).
yes, you get more for less (in theory, assuming your group is large) by opting into the employer plan but there's nothing to suggest that co-ops or other group negotiated insurance offerings would be unavailable if employer decoupling happened.
I could afford a platinum no-deductible plan on the TX exchange if my employer gave me the money they give to Cigna right now. They won't do it though, because that'd be taxable money. Also because everyone in my income bracket would bail out of the insurance, it'd be unsustainable and too expensive for the entry level employees, and the company be on the hook regardless because they have to offer something to everyone.
Currently, employers' spending on health insurance premiums is exempt from taxation for both employers and employees. Premiums paid by employees are exempt as well if the firm has established a Section 125 cafeteria plan; roughly 80 percent of employees with insurance have such a plan. This tax exclusion is extremely costly - it reduces federal and state tax revenues by $260 Billion per year and is the government's third largest expenditure on health care, after Medicare ($400 Billion) and Medicaid ($300 Billion).
...
Next, the author simulates a policy of removing the tax exclusion for employers but continuing to allow an exclusion for section 125 spending. This policy is estimated to raise $184 Billion, versus $263 Billion from full repeal [of the employer benefit].
I understand this, my point was that the tax benefit pales in comparison to the wage depression. My health plan is way more valuable to me than to my employer. If you're able to find a plan on the exchange that beats what your job gives and costs less, the exchanges are working better than I'd thought.
the platinum BCBS plan, last time I looked, costs ~$1100/mo for a family, which is approx $200/mo more than what I + my employer pay, and has no deductible so I would end up saving money, but I cannot get the employer paid portion.
Maybe I'm misunderstanding because I'm not an economics, but I don't get why the relative value has any bearing. If my employer gave me the $600/mo, they would pay taxes on that money and I would pay taxes on that money. That tax burden comes to ~$260 billion nationally. That tax burden is a disincentive, the primary disincentive, to just giving me the money.
I've never found a comparable plan for myself that wasn't more expensive. I'm sure an extra 25 dollar tax would add up quick for my boss. Just not as quick as the 100 dollar raises to cover the difference. I'll take your word that you could save money, but I could not. There was a definite gap.
How about this as an intermediary step for decoupling employment from health insurance. Everyone gets a HSA style pre-tax account that employer dollars get and can get deposited in. Employee can then use HSA funds to pay for premiums.
Employers can continue dodging taxes, employees can purchase any plan they want from any source.
I do think that the only level of 'choice' that makes sense is allowing people to choose between various high quality, well vetted plans of similar quality with their employer (or federal) dollars. So say, everyone gets $8000 each in a HSA. You can pick a plan at $6000, $8000, or $10000. Pick the cheap plan, and you get to save the extra money for retirement or health expenditures down the road. Pick the expensive one and you have to top up. It's all completely tax exempt, and every person gets the same. Employer contribution is 8% of net wages up to $100k. 5% beyond that but it goes into a communal kitty rather than to the employee.
$6000 plan likely doesn't let you pick a doctor and has higher deductables
$8000 plan means you can pick your doctor OR have lower deductables
$10000 plan means you can pick your doctor AND have lower deductables
There's also wage-stickiness, with asymmetric resistance to changes in wages even when the economic situation would normally lead to them, but that is a giant can of worms that I don't really understand either.
Anyways, let's try to ignore that and get to the tax consequence issue in a more straightforward manner. The tax incentives mean that for the employer the amount they pay for an employee's health care plan is more than what the employee would receive as after-tax take-home pay if the employer just directly provided that compensation as wages instead. Very importantly, a lot of that difference will be nominally on the employee's side in the form of them paying the individual income taxes and payroll taxes on those higher wages.
So, say you have an employer who is indifferent to providing health care coverage or just raising pay as long as it costs them the same amount in the end. For a health benefit that this employer would provide that costs $15000 a year, the alternative would have the employee receiving $15000 - X take home per year, a smaller amount. But a large portion of that X that will be taken out is in the employee's personal income and payroll taxes, as opposed to the employer holding onto all of it for their purposes.
Remove the tax incentives to employer provided health care plans, and the difference between the employer health plan and just raising wages directly becomes a whole lot smaller. But the employee would be eating the bulk of that difference without other changes.
How about this as an intermediary step for decoupling employment from health insurance. Everyone gets a HSA style pre-tax account that employer dollars get and can get deposited in. Employee can then use HSA funds to pay for premiums.
Employers can continue dodging taxes, employees can purchase any plan they want from any source.
That still has the major problem of most people not being able to tell what they actually need from a plan, much less what any specific plan actually covers. And the whole thing about group vs individual negotiating power
How about this as an intermediary step for decoupling employment from health insurance. Everyone gets a HSA style pre-tax account that employer dollars get and can get deposited in. Employee can then use HSA funds to pay for premiums.
Employers can continue dodging taxes, employees can purchase any plan they want from any source.
That still has the major problem of most people not being able to tell what they actually need from a plan, much less what any specific plan actually covers. And the whole thing about group vs individual negotiating power
Which is why the plans allowed onto the system need to be vetted strictly by a government agency (with Silver level plans likely being the lowest allowed) and the prices need to be set centrally. Effectively making the entire US buying public one negotiating group.
How about this as an intermediary step for decoupling employment from health insurance. Everyone gets a HSA style pre-tax account that employer dollars get and can get deposited in. Employee can then use HSA funds to pay for premiums.
Employers can continue dodging taxes, employees can purchase any plan they want from any source.
I do think that the only level of 'choice' that makes sense is allowing people to choose between various high quality, well vetted plans of similar quality with their employer (or federal) dollars. So say, everyone gets $8000 each in a HSA. You can pick a plan at $6000, $8000, or $10000. Pick the cheap plan, and you get to save the extra money for retirement or health expenditures down the road. Pick the expensive one and you have to top up. It's all completely tax exempt, and every person gets the same. Employer contribution is 8% of net wages up to $100k. 5% beyond that but it goes into a communal kitty rather than to the employee.
$6000 plan likely doesn't let you pick a doctor and has higher deductables
$8000 plan means you can pick your doctor OR have lower deductables
$10000 plan means you can pick your doctor AND have lower deductables
That sounds great, but isn't that a non-crappy version of the AHCA? An HSA based plan rather than an insurance based plan?
Marty: The future, it's where you're going? Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
Remove the tax incentives to employer provided health care plans, and the difference between the employer health plan and just raising wages directly becomes a whole lot smaller. But the employee would be eating the bulk of that difference without other changes.
Under what kind of situation though? One which employers of certain size have mandates to provide coverage as under the ACA? Small employers that aren't obligated will drop all coverage and pocket the premiums, likely not increasing employee wages at all or not commensurately.
Large employers will basically just start shopping for the absolute worst possible and most expensive plans the can get away with to shunt employees off onto exchanges without having to pay the penalty. Note: this is already happening. My last job somehow found a very high deductible plan that accounting for both employer and employee contributions was 50% higher premium for the same level bronze plan on the exchange. Only reason I stuck with it is because my monthly portion was $10 less than the exchange plan, it was ridiculous.
How about this as an intermediary step for decoupling employment from health insurance. Everyone gets a HSA style pre-tax account that employer dollars get and can get deposited in. Employee can then use HSA funds to pay for premiums.
Employers can continue dodging taxes, employees can purchase any plan they want from any source.
That still has the major problem of most people not being able to tell what they actually need from a plan, much less what any specific plan actually covers. And the whole thing about group vs individual negotiating power
You're absolutely right, I just think that the only way to get to single payer is to de-couple from employer provided insurance. There's two ways we can do it. Gradually, so that corporations and individuals have time to plan budgets and get acclimated. Or, cataclysmically where the private health insurance market explodes so spectacularly that there's a political mandate for single-payer. In one of these options, a lot of sick people die, the other, not as much. Unfortunately, due to corporate lobbying I think the latter is the only realistically achievable one right now
Remove the tax incentives to employer provided health care plans, and the difference between the employer health plan and just raising wages directly becomes a whole lot smaller. But the employee would be eating the bulk of that difference without other changes.
Under what kind of situation though? One which employers of certain size have mandates to provide coverage as under the ACA? Small employers that aren't obligated will drop all coverage and pocket the premiums, likely not increasing employee wages at all or not commensurately.
Large employers will basically just start shopping for the absolute worst possible and most expensive plans the can get away with to shunt employees off onto exchanges without having to pay the penalty. Note: this is already happening. My last job somehow found a very high deductible plan that accounting for both employer and employee contributions was 50% higher premium for the same level bronze plan on the exchange. Only reason I stuck with it is because my monthly portion was $10 less than the exchange plan, it was ridiculous.
I was just coming up with a simple hypothetical example to try to explain the concept as opposed going through all the big picture economic changes that would result from getting rid of the tax benefit in isolation or as part of other reform. Sorry if I wasn't clear about that, because when you zoom out you aren't dealing with a single employer indifferent to providing health plans or raising wages instead.
Also, spool's NBER article from earlier is from an attempt to model the larger macroeconomic effects of the changes to government tax incentives, and doesn't cleanly match up with my simplified example either. Maybe not quite apples and oranges, but something along those lines.
There's also wage-stickiness, with asymmetric resistance to changes in wages even when the economic situation would normally lead to them, but that is a giant can of worms that I don't really understand either.
Anyways, let's try to ignore that and get to the tax consequence issue in a more straightforward manner. The tax incentives mean that for the employer the amount they pay for an employee's health care plan is more than what the employee would receive as after-tax take-home pay if the employer just directly provided that compensation as wages instead. Very importantly, a lot of that difference will be nominally on the employee's side in the form of them paying the individual income taxes and payroll taxes on those higher wages.
So, say you have an employer who is indifferent to providing health care coverage or just raising pay as long as it costs them the same amount in the end. For a health benefit that this employer would provide that costs $15000 a year, the alternative would have the employee receiving $15000 - X take home per year, a smaller amount. But a large portion of that X that will be taken out is in the employee's personal income and payroll taxes, as opposed to the employer holding onto all of it for their purposes.
Remove the tax incentives to employer provided health care plans, and the difference between the employer health plan and just raising wages directly becomes a whole lot smaller. But the employee would be eating the bulk of that difference without other changes.
Edit: trying to reword for clarity
Wouldn't the employer portion be $15000 + Y, where Y is the increased tax it owes on revenue no longer deductible due to loss of the employer credit?
How about this as an intermediary step for decoupling employment from health insurance. Everyone gets a HSA style pre-tax account that employer dollars get and can get deposited in. Employee can then use HSA funds to pay for premiums.
Employers can continue dodging taxes, employees can purchase any plan they want from any source.
I do think that the only level of 'choice' that makes sense is allowing people to choose between various high quality, well vetted plans of similar quality with their employer (or federal) dollars. So say, everyone gets $8000 each in a HSA. You can pick a plan at $6000, $8000, or $10000. Pick the cheap plan, and you get to save the extra money for retirement or health expenditures down the road. Pick the expensive one and you have to top up. It's all completely tax exempt, and every person gets the same. Employer contribution is 8% of net wages up to $100k. 5% beyond that but it goes into a communal kitty rather than to the employee.
$6000 plan likely doesn't let you pick a doctor and has higher deductables
$8000 plan means you can pick your doctor OR have lower deductables
$10000 plan means you can pick your doctor AND have lower deductables
That sounds great, but isn't that a non-crappy version of the AHCA? An HSA based plan rather than an insurance based plan?
Give everyone the same amount of money and force them to spend it on healthcare isn't an awful plan if the amount of money isn't a pittance. And the account isn't 'really' an HSA. Just any extra money you have in the account goes into an HSA. Initially the money lives in a 'insurance costs allotment' for each year. You pick your plan, and there you go.
Plans in expensive (rural) areas would see an additional top up from the federal government, but that wouldn't be presented to the consumer. The insurer would also be barred from adjusting visible costs per person for any reason (so no more old people adjustment). Plans would receive an incentive to take old, sick, people but that again wouldn't be visible to the consumer. This would try to prevent plans 'artificially shaping' their user profile by selecting and marketing additional benefits that only lure healthy young people (free skateboard and skiing pass with every insured person!!). The consumer just sees 3 price points.
1) You get $2000 to save for deductibles or retirement, tax free
2) Breakeven
3) You spend $2000 extra of your own cash, tax free
Its a fully privately managed, but completely federally governed system. The government tells you the benefits you must offer at each price, and you get to compete for customers by trying to offer benefits beyond that.
Posts
Except employers concerned with their bottom line as opposed to their employees wouldn't increase wages, as healthcare has different tax benefits.
Wages are depressed for a reason.
Also, employers get a tax benefit for paying their share. That tax benefit disappears if they pay it directly to the employee.
This tax benefit is the main reason you can't say to your employer "no thanks on that insurance, I'll just take the money and buy and Exchange plan please" and have them agree. The other reason is that if you did, all the other healthy people also would, and then the cost of the group plan would go up so much that no one would be able to afford it.
This whole thing sounds like a capitalist suicide pact: "Let's distort every part of the market by removing all price elasticity from the system, and then incentivize everybody to keep the same system forever!"
McCain's plan back when he was running against Obama was basically "delete the employer tax benefit, tell them to pay people that money instead or else, subsidize the people who get too little, sell plans across state lines, job done."
Idk if it would have worked but he gets points for trying to decouple insurance and employment.
Like healthcare reform, removing the loophole created by the post-WWII anti-inflation measure is hard to do once the public gets used to it.
Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
Hahaha, yeah right, in what world would a company take the money they're putting into healthcare and pay it to you instead if they didn't have to? Your salary remains the same and you still have healthcare (now thanks to the government instead of them) so to them it's a bonus in their pocket, not yours. Realistically the government would need to take the money your company's paying into healthcare in the form of taxes so they could fund that healthcare, the only difference being that unemployed people would have access to care.
Also don't forget the ACA requires that they offer you a plan. Massive opting out is really bad for a company financially.
Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
Because the healthcare system in the US is fundamentally broken and the fact that employers are involved in it on any level is one of the largest cracks in the concrete
Well, realistically, the defences of the setup as it exists in the US are entirely ideological (many people adverse to "government takeover" of healthcare or whatever) and political (switching away from the system is likely politically impossible, at least any time in the near future). I'm not sure there's ever been anyone pushing for the current system on the grounds that "Hey, this evidence here shows that the current setup is actually good!".
This worked well as long as people stayed with one employer their entire career and were employed by companies instead of freelancing. By the time job mobility and alternative employment made this system obsolete, pro-labor groups had gotten so used to employment-based fringe benefits that this custom became impossible to remove.
Now we're in a situation where there is no money or infrastructure for an employment independent system, because nobody wants to pay more money for a while to set it up, and the educated people who have the capability to lead the charge have good employer provided insurance and would be acting against their own short term interests.
It's hard to construct an argument that changing the system would benefit the individual. Because it generally won't. It's good for society over the long term, but taking away fringe is like outlawing tips or repealing the ACA.
Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
That is kinda weird - then again, I don't have to go find an insurance plan myself.
http://www.npr.org/2017/03/27/521441490/fact-check-trump-says-obamacare-is-exploding-its-not
The article is very general, but I think it serves the purpose I need. Namely, I see little political cost in not fixing Obamacare immediately. Yes, it will need fixing in the future and that will no doubt be difficult to push through, but it does not have to be the number one priority.
Thank you everyone who posted replies to the questions I asked.
Most employer plans will have some coverage for basically any kind of non-elective medical care.
Even on a HDHP you get to pay their negotiated rates instead of the (silly) "list" prices, for example.
I mean, they already decided to waste gov't money by not airing ads that were recorded and had time slots purchased out of spite.
So it's more like 'Trump and co are already actively undermining it'
They don't need to give you money though. You could just increase the Medicare payroll tax on the employer by approximately the amount most companies pay for insurance and fund single payer that way. Taxes would still probably need to increase to cover everyone not employed, which would be a hard sell but it would be significantly lower structured this way.
Well, that would redirect the employer insurance money (sort of - it's not a uniform amount across companies) but it doesn't solve the loss of the corporate tax break, which is a significant cost, and it doesn't solve the employee portion ($over 3600/year for me) or the deductible ($5400 for my family, per year!).
So you are talking about increasing taxes on individuals and companies, wiping out a negotiated benefit for employees with no compensation, and still charging individuals for coverage. Is that right?
if you decoupled insurance from employment and the average worker realized how much they really paid for health insurance we'd have single payer yesterday, because that tax would suddenly not seem so huge
"here's a $15,000 a year raise! now you spend $15,000 more on health insurance"
I don't believe this is true. Payroll is fully deductible. The issue is that I'd be a fucking moron to take the money because I'd never find a comparable plan for less as a single entity looking for insurance. If my company wanted to get out of insuring its employees, it'd have to pay us 3 times what it pays for health care, at least. It's not a tax issue, it's a buying power issue. You get more health care for less money bargaining as a group.
er, I'm pretty sure health benefits also don't trigger payroll taxes
so if they were spending 2k a year on your health plan they can't just give you a 2k raise and keep the budget flat
i'd be 2k minus the employer share of the payroll tax that you normally never see or think about
fuck up once and you break your thumb / if you're happy at all then you're god damn dumb
that's right we're on a fucked up cruise / God is dead but at least we have booze
bad things happen, no one knows why / the sun burns out and everyone dies
In theory, it would be so that the government could give you health care, or a private but massively regulated mandate that functioned similarly. I don't think anyone who is proposing removing health care from employment is doing so while also leaving the current system in place, because yea that'd end up worse for a lot of people.
It is true though - the employer can deduct 100% of the money they spend on health benefits from their tax bill. Moreover, that value is not taxable income for the employee either, so removing it would constitute a tax increase (as the current benefit is tax-free, but an equivalent benefit would be purchased with taxable income if first paid to the employee).
yes, you get more for less (in theory, assuming your group is large) by opting into the employer plan but there's nothing to suggest that co-ops or other group negotiated insurance offerings would be unavailable if employer decoupling happened.
I could afford a platinum no-deductible plan on the TX exchange if my employer gave me the money they give to Cigna right now. They won't do it though, because that'd be taxable money. Also because everyone in my income bracket would bail out of the insurance, it'd be unsustainable and too expensive for the entry level employees, and the company would be on the hook regardless because they have to offer something to everyone.
edit: some sauce
I understand this, my point was that the tax benefit pales in comparison to the wage depression. My health plan is way more valuable to me than to my employer. If you're able to find a plan on the exchange that beats what your job gives and costs less, the exchanges are working better than I'd thought.
insurance companies also know that employer money is tax deductible. they can charge more.
the platinum BCBS plan, last time I looked, costs ~$1100/mo for a family, which is approx $200/mo more than what I + my employer pay, and has no deductible so I would end up saving money, but I cannot get the employer paid portion.
Maybe I'm misunderstanding because I'm not an economics, but I don't get why the relative value has any bearing. If my employer gave me the $600/mo, they would pay taxes on that money and I would pay taxes on that money. That tax burden comes to ~$260 billion nationally. That tax burden is a disincentive, the primary disincentive, to just giving me the money.
Wait, Let's Clown These Scrub-Ass Doofuses Some More
The harder the rain, honey, the sweeter the sun.
Employers can continue dodging taxes, employees can purchase any plan they want from any source.
I've never found a comparable plan for myself that wasn't more expensive. I'm sure an extra 25 dollar tax would add up quick for my boss. Just not as quick as the 100 dollar raises to cover the difference. I'll take your word that you could save money, but I could not. There was a definite gap.
I do think that the only level of 'choice' that makes sense is allowing people to choose between various high quality, well vetted plans of similar quality with their employer (or federal) dollars. So say, everyone gets $8000 each in a HSA. You can pick a plan at $6000, $8000, or $10000. Pick the cheap plan, and you get to save the extra money for retirement or health expenditures down the road. Pick the expensive one and you have to top up. It's all completely tax exempt, and every person gets the same. Employer contribution is 8% of net wages up to $100k. 5% beyond that but it goes into a communal kitty rather than to the employee.
$6000 plan likely doesn't let you pick a doctor and has higher deductables
$8000 plan means you can pick your doctor OR have lower deductables
$10000 plan means you can pick your doctor AND have lower deductables
Anyways, let's try to ignore that and get to the tax consequence issue in a more straightforward manner. The tax incentives mean that for the employer the amount they pay for an employee's health care plan is more than what the employee would receive as after-tax take-home pay if the employer just directly provided that compensation as wages instead. Very importantly, a lot of that difference will be nominally on the employee's side in the form of them paying the individual income taxes and payroll taxes on those higher wages.
So, say you have an employer who is indifferent to providing health care coverage or just raising pay as long as it costs them the same amount in the end. For a health benefit that this employer would provide that costs $15000 a year, the alternative would have the employee receiving $15000 - X take home per year, a smaller amount. But a large portion of that X that will be taken out is in the employee's personal income and payroll taxes, as opposed to the employer holding onto all of it for their purposes.
Remove the tax incentives to employer provided health care plans, and the difference between the employer health plan and just raising wages directly becomes a whole lot smaller. But the employee would be eating the bulk of that difference without other changes.
Edit: trying to reword for clarity
That still has the major problem of most people not being able to tell what they actually need from a plan, much less what any specific plan actually covers. And the whole thing about group vs individual negotiating power
Which is why the plans allowed onto the system need to be vetted strictly by a government agency (with Silver level plans likely being the lowest allowed) and the prices need to be set centrally. Effectively making the entire US buying public one negotiating group.
That sounds great, but isn't that a non-crappy version of the AHCA? An HSA based plan rather than an insurance based plan?
Doc: That's right, twenty five years into the future. I've always dreamed on seeing the future, looking beyond my years, seeing the progress of mankind. I'll also be able to see who wins the next twenty-five world series.
Under what kind of situation though? One which employers of certain size have mandates to provide coverage as under the ACA? Small employers that aren't obligated will drop all coverage and pocket the premiums, likely not increasing employee wages at all or not commensurately.
Large employers will basically just start shopping for the absolute worst possible and most expensive plans the can get away with to shunt employees off onto exchanges without having to pay the penalty. Note: this is already happening. My last job somehow found a very high deductible plan that accounting for both employer and employee contributions was 50% higher premium for the same level bronze plan on the exchange. Only reason I stuck with it is because my monthly portion was $10 less than the exchange plan, it was ridiculous.
You're absolutely right, I just think that the only way to get to single payer is to de-couple from employer provided insurance. There's two ways we can do it. Gradually, so that corporations and individuals have time to plan budgets and get acclimated. Or, cataclysmically where the private health insurance market explodes so spectacularly that there's a political mandate for single-payer. In one of these options, a lot of sick people die, the other, not as much. Unfortunately, due to corporate lobbying I think the latter is the only realistically achievable one right now
I was just coming up with a simple hypothetical example to try to explain the concept as opposed going through all the big picture economic changes that would result from getting rid of the tax benefit in isolation or as part of other reform. Sorry if I wasn't clear about that, because when you zoom out you aren't dealing with a single employer indifferent to providing health plans or raising wages instead.
Also, spool's NBER article from earlier is from an attempt to model the larger macroeconomic effects of the changes to government tax incentives, and doesn't cleanly match up with my simplified example either. Maybe not quite apples and oranges, but something along those lines.
Wouldn't the employer portion be $15000 + Y, where Y is the increased tax it owes on revenue no longer deductible due to loss of the employer credit?
Give everyone the same amount of money and force them to spend it on healthcare isn't an awful plan if the amount of money isn't a pittance. And the account isn't 'really' an HSA. Just any extra money you have in the account goes into an HSA. Initially the money lives in a 'insurance costs allotment' for each year. You pick your plan, and there you go.
Plans in expensive (rural) areas would see an additional top up from the federal government, but that wouldn't be presented to the consumer. The insurer would also be barred from adjusting visible costs per person for any reason (so no more old people adjustment). Plans would receive an incentive to take old, sick, people but that again wouldn't be visible to the consumer. This would try to prevent plans 'artificially shaping' their user profile by selecting and marketing additional benefits that only lure healthy young people (free skateboard and skiing pass with every insured person!!). The consumer just sees 3 price points.
1) You get $2000 to save for deductibles or retirement, tax free
2) Breakeven
3) You spend $2000 extra of your own cash, tax free
Its a fully privately managed, but completely federally governed system. The government tells you the benefits you must offer at each price, and you get to compete for customers by trying to offer benefits beyond that.