Transitioning from employer-paid healthcare to tax-paid healthcare

[Craig234]

This isn't exactly new, but I haven't seen it broken out.

It seems there's a challenge in the healthcare reform politically: if the system of employers paying for most healthcare is changed to one in which taxes pay for most healthcare (the single payer system), there will likely be a big taxpayer backlas at this 'new' tax that reduces the expenses for business.

It's not clear what to do about that. One option is to just not make the change, somehow leave employers paying the cost, but can that be defended other than for politics?

One issue would seem to be the idea that the thousands per employee that business saves doesn't have any direct link to that money going to the employees' pockets for their new healthcare tax. What's to stop business from just pocketing the healthcare savings, and employees getting the burden?

That's a pretty huge political barrier - people don't want a new tax, and even if it's addressed, t's hard to get people to not fear the change.

It might be tempting to want to legislate a solution, to force employers to somehow either continue to pay for the cost or to give the savings to employees, but if one employer offers healthcare and another doesn't, why should the one who does have a government-forced cost while his competitor gets an advantage, instead of the coluntary basis on which it's done now? That seems unfair.

There might be some solution - for employees who already pay their own cost, this isn't a new cost, just a different name on the check, so the issue is those who have it paid.

Perhaps the best solution is to leave it to employers and employees to sort out - as long as that doesn't create too much political backlah against reform.

Hopefully, most employers would shift the funds to compensation. A law COULD at least require employers to clearly diclose to employers what they do with the money.

Edit: I deleted a referent to how many people want single-payer, because the issue is less clear than the comment suggested. It's not cnentral to the topic.

For what it's worth, polls vary over time, recently dipping for it; in an earlier poll between no change and single-payer, 65% chose single-payer, but in a more recent poll with various options, single-payer support was at 32%. If I recall correctly, the 'public option' seems to have majority support.

 

[chucky2]

Ok, here's the thing Craig:

I'm not adverse to socialized medicine, UHC, whatever: Some things make sense to do at a National level, both in terms of management, and buying power.

However, here's the two things I'm most worried about:

1.) We drop employer based HC (fine in theory), and go to tax based HC (fine in theory). I now have a tax increase (still fine in theory), but presumably my increased wages make up for that since my employer doesn't have to pay for HC: This is where theory breaks down I believe. You absolutely know what will happen here, and that is, the employers will drop the HC plans, and either not transfer that complete savings to the employee, or, transfer an extremely small amount. Worse, I can absolutely see employers treating any additional money paid to the employee as positive - instead of neutral - compensation, which then screws the employee when they're looking for their yearly raise and/or bonus.

So that's problem set #1.

2.) No where do I see any mandate that is going to increase the Dr. and RN. count in the country by at least 50%. And given the additional load we're talking about here on the already taxed system, it's going to have to be at least 50% increase...more like 75% if you want to really start bringing costs down...along with lawsuit reform.

Problem set #2.

So sign me up for whoever's plan can actually care for both of these things prior to enacting any changes in the current HC model. I don't want to see any bills being put out until these two showstoppers are cared for completely, no loopsholes, full - at worse, revenue/expense neutral - funding, real business, timeline, and staffing plans in place.

Show me that and you've got my support, regardless if it's the most UltraLib on the planet.

If they can't, go back to the drawing board and start again...they ain't there yet.

Chuck

 

[CADsortaGUY]

I got to

the single payer system liberals and apparently most Americans want

and had to stop. If you start with that sort of premise/assumption, how can anything later be even close to reality?

 

[chucky2]

Originally posted by: CADsortaGUY
I got to

the single payer system liberals and apparently most Americans want

and had to stop. If you start with that sort of premise/assumption, how can anything later be even close to reality?

I agree, but I still played along. Seriously though, if some plan can address my two main concerns, I'm all ears on it. Until those two are addressed though, it's a double deal breaker.

Chuck

 

[Wheezer]

You absolutely know what will happen here, and that is, the employers will drop the HC plans, and either not transfer that complete savings to the employee, or, transfer an extremely small amount. Worse, I can absolutely see employers treating any additional money paid to the employee as positive - instead of neutral - compensation, which then screws the employee when they're looking for their yearly raise and/or bonus.

a perfect example of this is how the banks treated the bail out money....they hoarded it.

If I am an employer and I no longer have to pay for benefits, why the hell would I let that money go elsewhere?

because I'm such a nice guy?

Don't think so, it's going to go into other investments and into my pocket, sure some *might* make it to the employee but not near as much as what people wish would happen.

 

[EagleKeeper]

Has anyone also considered the union contracts w/ respect to health care coverage

 

[Gonad the Barbarian]

Your two problems or worse still exist if no action is taken. 2 isn't happening either way, lawsuit reform has been shown time again not to make any substantial difference, and your lost wages in 1 will be worse with health care costs increasing as they are. Reform can be far from perfect and still be a massive improvement over the mess we have now.

 

[Ozoned]

Originally posted by: Craig234
This isn't exactly new, but I haven't seen it broken out.

It seems there's a challenge in the healthcare reform politically: if the system of employers paying for most healthcare is changed to one in which taxes pay for most healthcare (the single payer system liberals and apparently most Americans want), there will likely be a big taxpayer backlas at this 'new' tax that reduces the expenses for business.

It's not clear what to do about that. One option is to just not make the change, somehow leave employers paying the cost, but can that be defended other than for politics?

One issue would seem to be the idea that the thousands per employee that business saves doesn't have any direct link to that money going to the employees' pockets for their new healthcare tax. What's to stop business from just pocketing the healthcare savings, and employees getting the burden?

That's a pretty huge political barrier - people don't want a new tax, and even if it's addressed, t's hard to get people to not fear the change.

It might be tempting to want to legislate a solution, to force employers to somehow either continue to pay for the cost or to give the savings to employees, but if one employer offers healthcare and another doesn't, why should the one who does have a government-forced cost while his competitor gets an advantage, instead of the coluntary basis on which it's done now? That seems unfair.

There might be some solution - for employees who already pay their own cost, this isn't a new cost, just a different name on the check, so the issue is those who have it paid.

Perhaps the best solution is to leave it to employers and employees to sort out - as long as that doesn't create too much political backlah against reform.

Hopefully, most employers would shift the funds to compensation. A law COULD at least require employers to clearly diclose to employers what they do with the money.

If you watched or listened to fox news you would know some of the inner workings of the current proposed health care legislation, and that the sub-topic that you addressed has been discussed, ad nauseum.

 

[chucky2]

Originally posted by: Gonad the Barbarian
Your two problems or worse still exist if no action is taken. 2 isn't happening either way, lawsuit reform has been shown time again not to make any substantial difference, and your lost wages in 1 will be worse with health care costs increasing as they are. Reform can be far from perfect and still be a massive improvement over the mess we have now.

BS 2 can't happen. If the Fed. is going to nationalize HC, then they can nationalize Dr. and RN programs or provide heavy subsidies...even have their own schools. If the current institutions are output limited, which I doubt, but still, even if they are, then more programs will need to open up.

And as far as 1, I have employer based HC, so no, it won't be worse. What will be worse is UHC passes based on increased taxing, my employer drops HC, I get no or meaningless raise, and my taxes skyrocket to pay for HC now, and increased cost as costs go up: See 2.

That's worse. What's not worse is keeping my employer based HC and having small increases.

Chuck

 

[Craig234]

Originally posted by: Ozoned

Originally posted by: Craig234
This isn't exactly new, but I haven't seen it broken out [in this forum].

If you watched or listened to fox news you would know some of the inner workings of the current proposed health care legislation, and that the sub-topic that you addressed has been discussed, ad nauseum.

If I put a nice slice of cheese on a s**t sandwhich, it's still a s**t sandwhich.

I edited my post above to make a point clearer for you.

I also edited the OP to remove the reference to how many people favor single-payer, as noted, to better describe the support.

 

[GroundedSailor]

Or consider that employers could be taxed in the same way as FICA and thus the employee will not have to pay extra or maybe a small amount, and the employer still get to write off the contribution as expenses. In the end it will nett out or, as in other countries with UHC, become cheaper overall for everyone.

 

[Craig234]

I appreciate Chucky's response. His #1 is a sort of restatement of the thread topic, and his #2 is another point to consider, whatever the actual percent increase needed.

I wrote and removed from the OP a series of speculations about possible solutions to #1, with advantages and flaws.

As to CC's point, legislation may be needed to provide for union contracts to convert the money saved on healthcare into salary.

 

[Craig234]

Originally posted by: GroundedSailor
Or consider that employers could be taxed in the same way as FICA and thus the employee will not have to pay extra or maybe a small amount, and the employer still get to write off the contribution as expenses. In the end it will nett out or, as in other countries with UHC, become cheaper overall for everyone.

The question I have there is how the people without employer insurance will be paid for. Will it all be lumped onto business?

 

[blackangst1]

Originally posted by: chucky2

Originally posted by: CADsortaGUY
I got to

the single payer system liberals and apparently most Americans want

and had to stop. If you start with that sort of premise/assumption, how can anything later be even close to reality?

I agree, but I still played along. Seriously though, if some plan can address my two main concerns, I'm all ears on it. Until those two are addressed though, it's a double deal breaker.

Chuck

Im in the same boat.

My part of my current benefits are approx. 11% of my gross, and thats for a gold plated plan. My employer's portion is about 16% of my gross, so altogether 27% of my gross is for healthcare. Now, unless the government's cost is 1/2 or more of current (which is HIGHLY unlikely), my increase from my employer (the $$$ I pay for my portion) wont offset the new increase in taxes to cover my new healthcare plan. This troubles me.

 

[Hayabusa Rider]

It would be nice to have more practitioners, but that's going to cost more not less. Practitioner pay is a small part of health care, and you aren't going to get wage reductions to the point where it will make a difference. Anyone who thinks someone is going to give up years of their life to make an accountants starting salary is going to be disappointed.

 

[Ozoned]

How on earth do you see money saved by an employer if they are given a choice of either providing health care insurance or paying a penalty that is as much as the cost of health care insurance if they don't?

 

[Gonad the Barbarian]

Originally posted by: chucky2

Originally posted by: Gonad the Barbarian
Your two problems or worse still exist if no action is taken. 2 isn't happening either way, lawsuit reform has been shown time again not to make any substantial difference, and your lost wages in 1 will be worse with health care costs increasing as they are. Reform can be far from perfect and still be a massive improvement over the mess we have now.

BS 2 can't happen. If the Fed. is going to nationalize HC, then they can nationalize Dr. and RN programs or provide heavy subsidies...even have their own schools. If the current institutions are output limited, which I doubt, but still, even if they are, then more programs will need to open up.

And as far as 1, I have employer based HC, so no, it won't be worse. What will be worse is UHC passes based on increased taxing, my employer drops HC, I get no or meaningless raise, and my taxes skyrocket to pay for HC now, and increased cost as costs go up: See 2.

That's worse. What's not worse is keeping my employer based HC and having small increases.

Chuck

2 is certainly not happening on its own. We're no worse off if current reform doesn't address it, but it would of course be an improvement if it did. 1 will be worse without reform as your wages are curtailed to cover ever increasing insurance costs or your employer drops your coverage altogether. Insurance costs are outpacing wage increases by a large amount. Taking that trend to its extreme absurd end you'll end up paying your employer to work to keep your insurance. Getting insurance from your employer doesn't make you immune from the very problems that are in large part prompting reform. At the very least you're one layoff away from being without it.

 

[cubby1223]

The important question to look at here is, how did Hugo Chavez handle health care issues in Venezuela?

 

[Athena]

Originally posted by: GroundedSailor
Or consider that employers could be taxed in the same way as FICA and thus the employee will not have to pay extra or maybe a small amount, and the employer still get to write off the contribution as expenses. In the end it will nett out or, as in other countries with UHC, become cheaper overall for everyone.

That's exactly how they do it in many other countries. In France, employers pay 15% of gross payroll into the non-profit health funds and employees pay less than 1%. In Germany, companies and employees pay about 8% each (the government pays for children, who are considered a national treasure/resource). Again the funds are private, non-profit entities. France has just a few funds for the different business sectors, Germany has over 200 that compete on service.

 

[Athena]

Originally posted by: Common Courtesy
Has anyone also considered the union contracts w/ respect to health care coverage

What problems do you envision? As long as unions have the same coverage, what difference does it make how the delivery is organized?

You could have a basic national plan with supplementary coverage provided by employers to fill in anything that the national plan doesn't include.

 

[GuitarDaddy]

In the last few years more and more companies have made it a point to be sure the employees know the full cost of the healthcare benifets that they pay out, I know mine does. For companies like mine if they attempted to keep the savings it would be very obvious and likely to cause a mutiny, and I doubt they would try it. So I think that schenario is valid but probably not wide spread.

 

[ebaycj]

Originally posted by: chucky2
Ok, here's the thing Craig:

I'm not adverse to socialized medicine, UHC, whatever: Some things make sense to do at a National level, both in terms of management, and buying power.

However, here's the two things I'm most worried about:

1.) We drop employer based HC (fine in theory), and go to tax based HC (fine in theory). I now have a tax increase (still fine in theory), but presumably my increased wages make up for that since my employer doesn't have to pay for HC: This is where theory breaks down I believe. You absolutely know what will happen here, and that is, the employers will drop the HC plans, and either not transfer that complete savings to the employee, or, transfer an extremely small amount. Worse, I can absolutely see employers treating any additional money paid to the employee as positive - instead of neutral - compensation, which then screws the employee when they're looking for their yearly raise and/or bonus.

So that's problem set #1.

2.) No where do I see any mandate that is going to increase the Dr. and RN. count in the country by at least 50%. And given the additional load we're talking about here on the already taxed system, it's going to have to be at least 50% increase...more like 75% if you want to really start bringing costs down...along with lawsuit reform.

Problem set #2.

So sign me up for whoever's plan can actually care for both of these things prior to enacting any changes in the current HC model. I don't want to see any bills being put out until these two showstoppers are cared for completely, no loopsholes, full - at worse, revenue/expense neutral - funding, real business, timeline, and staffing plans in place.

Show me that and you've got my support, regardless if it's the most UltraLib on the planet.

If they can't, go back to the drawing board and start again...they ain't there yet.

Chuck

Problem set #1 is easily handled by setting payments up as a payroll tax (just like SS and Medicare). You could continue on the same "deductability" that they have now, so that they do not have to drop salaries to cover the "new" costs.

Problem set #2 is easily handled by:
giving scholarships (or extremely low fixed-interest loans, like 1% interest) to nursing school / med school.
forcing state medical schools to increase the # of available slots. etc..
adding a governmental certifying body (aside from the AMA).

Obviously, #2 wouldn't be handled overnight, but it would be pretty quick (probably a 6 year turnaround before the #'s start to increase dramatically).

 

[ebaycj]

Originally posted by: Craig234

Originally posted by: GroundedSailor
Or consider that employers could be taxed in the same way as FICA and thus the employee will not have to pay extra or maybe a small amount, and the employer still get to write off the contribution as expenses. In the end it will nett out or, as in other countries with UHC, become cheaper overall for everyone.

The question I have there is how the people without employer insurance will be paid for. Will it all be lumped onto business?

Yep. They can deal with it.

 

[ebaycj]

And as far as "Tort reform" goes, since we know it doesn't work (as evidenced by IL and TX), why not provide a government option for malpractice insurance to doctors? It's just another cost in the system that we all end up paying into.

 

[chucky2]

Originally posted by: ebaycj

Problem set #1 is easily handled by setting payments up as a payroll tax (just like SS and Medicare). You could continue on the same "deductability" that they have now, so that they do not have to drop salaries to cover the "new" costs.

Well, I'm not so much worried about how they'd deduct the HC tax, as how much they're going to deduct and is that going to match what I and my employer pay combined right now, and will that amount - or more - be added to my paycheck so I see a zero sum hit on my net paycheck. If I see a negative, meaning, I'm making less net than I am today, then there's 4 conditions that happened:

1.) HC tax is same as current employee and employer combined pay, but "raise" to employee wasn't enough. <- this is what I'd be most worried about, it essentially means the employer just pocketed the money they were paying and F'd the employees. Why? Because they can, who's going to stop them?

2.) HC tax is more than current HC and employer combined pay, but employer did transfer their current cost to an employee "raise" that goes to offset the new HC tax. <- I'm almost as concerned about this as 1 above, given how .gov estimates hardly ever cost what they project at the start of a program (and we haven't even started yet).

3.) HC tax is more than current HC and employer combined pay, and employer shorts employee on the "raise". Upon re-thinking, this is likely the most likely. Given employers wanting to hold onto all that large amount of "free" money they just got, and .gov's history of projects always going way over budget, this is worst case, and unfortunately, the most probable.

4.) Some rare universe condition exists where the employees gets the "raise" to pay the new HC tax, and the new HC tax is actually on target or - gasp - below target. I think we all can agree this is not likely to happen.

Problem set #2 is easily handled by:
giving scholarships (or extremely low fixed-interest loans, like 1% interest) to nursing school / med school.
forcing state medical schools to increase the # of available slots. etc..
adding a governmental certifying body (aside from the AMA).

Obviously, #2 wouldn't be handled overnight, but it would be pretty quick (probably a 6 year turnaround before the #'s start to increase dramatically).

Well, until we see a bill that address #2 to start getting some competition into HC, and easy the current supply shortage, adding sh1tloads of additional people is going to only do one thing: radically drive up costs and/or lower overall quality.

So which bill ironclads my #1 and #2 points?

Chuck