Taxes on Health care Benefits - OMG!! What is Obama doing?
A little bit of history here. Employee benefit plans proliferated in the 1940’s and 1950’s. Strong unions tried to bargain for better benefit packages, including tax-free, employer-sponsored health insurance but didn't gain much traction. It wasn't until the wartime (1939-1945) wage freezes imposed by the government that tax-free employer based health care coverage really took off. Unable by law to attract workers by paying more, employers instead improved their benefit packages in particular health care. This is why today we actually have compensation packages that consist of cash and benefits. The cash is taxed, the benefits traditionally aren't.
Recently as health care has become more and more expensive you effectively have a process where you now have health care benefits that are free to grow and grow and not be taxed or move your cash income into a higher taxation rate. However, if you aren't an eligible employee or an employee at all you need to buy your health care in the general market so you are already paying for the benefit from after tax dollars.
The reality is that the US is the only country where most of the population gets its health care coverage through its employer. So if you are forced to buy your coverage in what is called the individual market (non-employer market) because you are a part-time employee, contract employee or simply unemployed you are forced to buy health care with after tax dollars. (Some states have recently allowed the creation of Health Savings Accounts -HSA's - to allow individuals to put aside pre-tax dollars for health care expenses.) So not only is the rate of the health care insurance higher due to the fact that the insurance pool under which it is priced is smaller and therefore the cost per insured higher; but in addition the dollars used to pay this insurance are after tax dollars.
In conclusion there are thousands and thousands of small decisions that have been made throughout the years that have created the health care mess we have today in the US. To fix the health care problem in this country is going to take massive change.
If we are going to continue to allow a middleman (the insurance companies) to price the service then at the very least we need to:
1. - make sure that the insurance pool that people get priced into is not selectively small
2. - everyone - FT employed, PT employed and unemployed alike - pays for this benefit from after-tax dollars
Ironically this was part of McCain's plan. The only thing that is "shocking" in Obama's case is that he ran against this and now all of a "sudden" he has seen the light. The sad truth is that most of the plans being promoted today only nibble or slice at the problem from one angle. The reality is that the core issues of almost every plan out there need to be implemented for real change to occur. A real breakthrough would have been for Obama to add these features of the McCain plan to his. To exchange one plan for the other especially if it is simply for political expediency ....
Recently as health care has become more and more expensive you effectively have a process where you now have health care benefits that are free to grow and grow and not be taxed or move your cash income into a higher taxation rate. However, if you aren't an eligible employee or an employee at all you need to buy your health care in the general market so you are already paying for the benefit from after tax dollars.
The reality is that the US is the only country where most of the population gets its health care coverage through its employer. So if you are forced to buy your coverage in what is called the individual market (non-employer market) because you are a part-time employee, contract employee or simply unemployed you are forced to buy health care with after tax dollars. (Some states have recently allowed the creation of Health Savings Accounts -HSA's - to allow individuals to put aside pre-tax dollars for health care expenses.) So not only is the rate of the health care insurance higher due to the fact that the insurance pool under which it is priced is smaller and therefore the cost per insured higher; but in addition the dollars used to pay this insurance are after tax dollars.
In conclusion there are thousands and thousands of small decisions that have been made throughout the years that have created the health care mess we have today in the US. To fix the health care problem in this country is going to take massive change.
If we are going to continue to allow a middleman (the insurance companies) to price the service then at the very least we need to:
1. - make sure that the insurance pool that people get priced into is not selectively small
2. - everyone - FT employed, PT employed and unemployed alike - pays for this benefit from after-tax dollars
Ironically this was part of McCain's plan. The only thing that is "shocking" in Obama's case is that he ran against this and now all of a "sudden" he has seen the light. The sad truth is that most of the plans being promoted today only nibble or slice at the problem from one angle. The reality is that the core issues of almost every plan out there need to be implemented for real change to occur. A real breakthrough would have been for Obama to add these features of the McCain plan to his. To exchange one plan for the other especially if it is simply for political expediency ....
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