Saw this article on taxing health-care benefits over at Ezra Klein's new digs at the WaPo. There's an interesting bit from an Economic Policy Institute report on the people who tend to use the "premium" health-care policies that Max Baucus suggested in his white paper we tax:
...research shows that those people tend not to be wealthy highfliers with gold-plated insurance plans, as advocates assert, but those who have to pay high premiums just for basic coverage -- the old, the sick, women of childbearing age and residents of high-cost urban areas. Elise Gould, director of health policy research at the liberal Economic Policy Institute, found that a similar cap suggested by a 2005 tax reform panel would have raised taxes mainly on workers with family coverage, many of them in smaller firms with high concentrations of older, female or unionized workers.
Klein:
Gould's research showed that 32 percent of families making between $17,000 and $30,000 have health-care benefits above $11,500, which is where Gould assumed the exclusion would be capped. But 47 percent of workers making more than $46,000 had benefits above that cap. And though Gould didn't break the data down, I can almost guarantee you that that number would be much higher if you examined workers making more than $100,000. The cap is progressive, and sharply so.
Max Baucus, meanwhile, is only considering taxing benefits above $15,000. Which makes it significantly more progressive than the policy Gould is evaluating.
I'm not sure how progressive this tax would be. First, that the tax would kick in for half of wage earners making $46K seems absurdly low. Those are the very families that are being slaughtered by health care costs. Second, the assumption that the cost of health plans for people making more than $100K rises sharply is faulty; at some point, health care premiums top out. You can only spend so much on a health insurance policy. To me, this cap looks like a burden shouldered disproportionately by middle-class to upper-middle-class families.
Still, the $15K cap seems doable. While the EPI study tells us that "gold-plated" policies are held by people who are paying exorbitantly high rates because of age or demographics or history, there's legislation being mulled in Congress that would impose "community rating" on insurance companies:
Community rating would render it illegal for insurers to price discriminate based on the demographics of the applicant. In the draft bill released by the Senate's Health, Education, Labor, and Pensions Committee, for instance, "premium rates may not vary by health status-related factors, gender, class of business, claims experience." They can vary by age and geography, but the amount they can vary is actually capped.
If passed, that would ensure that high insurance premiums would correspond directly to the services received, not be a insurer-defined judgment of risk. Those that need it should still be able to afford it.
Still, and as I've said before, we need to encourage more people to spend more on policies, not the other way around. That's the whole basis of mandatory coverage after all. If those that don't need the health care...now....pay more into the system, it makes prices for all lower.
But give me a strong public option, and I'd gladly agree to a cap... |
