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And this one is a potential doozy!

As reported in Reuters, some Dems are open to the idea of taxing healthcare insurance benefits, currently paid by employers, as income!

“I think that tax provision should be on the table,” said Senate Finance Committee Chairman Max Baucus, who will play a major role in writing the legislation to revamp the U.S. healthcare system as promised by President Barack Obama.

“It’s too aggressive. It skews the system,” he said of the tax benefit.

Think about that for a moment. 

Then consider your own situation. 

If your employer currently provides your health insurance, even if you currently contribute something toward the policy premiums through payroll deduction, you do not pay taxes on the cost of your health insurance policy total cost.

Today, the average cost of a policy for an individual runs somewhere in the neighborhood of $5000, and for a family policy an average $12,000. 

The majority of this cost is paid by employers so few employees have any idea how much it really costs for their policy, they just know they’re happy they have coverage, even if they have to contribute toward the premium which is in pre-tax dollars.

If all of a sudden the paradigm changed and now you’re on the hook for paying taxes on that policy, as if the premiums are now part of your taxable income, how does that impact your personal finances and tax burden each year?

Each day it’s looking more and more like the policy makers in Washington are playing a big game of sleight-of-hand with the American taxpayers; as in, no we won’t increase your taxes by way of raising marginal rates falling below the current 33% level, so don’t pay attention to the stealth increases we’re going to hit you with, like cap-and-trade and including your health insurance premiums as taxable income!

As I noted in a post yesterday, a couple with an adjust gross income of $150,000 will not see their income taxes increase.  But what happens when their taxable income now includes a family health insurance policy worth $12,000 a year that’s primarily paid for by one of their employers?

Well, for one thing, today their federal income tax is $25,732 with personal and standard deductions only.

If this type of proposal moves forward and becomes the new standard to calculate income, this same couple now faces a tax increase, taxed on an AGI of $162,000, making their federal income taxes rise to $29,092 – an increase of $3,360 in federal income taxes.

But wait you say – they can deduct medical expenses and medical expenses includes insurance premiums.

Well now, let’s do math.

If their taxable income is $162,000, they can deduct medical expenses which exceeds 7.5% of their AGI – so at this new higher taxable income level, they can only deduct medical expenses exceeding $12,150. 

Ooops, they can’t deduct the cost of premiums that are driving up their tax burden – nope they just have to suck it up and pay, it is, afterall, for the greater good, right?

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We see and hear a lot of reasons presented why we need to adopt a universal healthcare model in the United States.  The most frequently cited is that if we look at other developed nations, they have universal healthcare and spend less of their GDP on healthcare than we do; that if we adopt a model similar to theirs, our healthcare costs will be lowered and the delivery of healthcare will improve.

The Walker Report makes the case using the newly signed stimulus package as a cost comparison:

If we adopt any one of the health care systems used by the dozens of first world nations with universal health care, we would save the equivalent of one stimulus package a year.

The article above even goes so far as opining that if we could only be as efficient as Luxembourg or Finland, our healthcare system would be great…but that might not be an attainable goal, so maybe doing as well as  Germany, France, or Switzerland might be our best goal for now.

One thing I love about the internet is quick access to numbers and statistics.  While GDP serves as one measure, perhaps a better one is actual dollars spent per capita in US dollars?  That way we’re comparing real dollars to real dollars rather than an abstract percentage of gross-domestic-product.

Nation Master is a neat site that lets you define out statistics by category and includes the category “health” for the nations in its database.  When we do a search for across the board “health” and then  “total expenditure in US$” we are returned statistics that reveal that in 2004 (latest data available for all reporting countries) the following was spent, in US-dollars, by each country in the list, sourced from the World Development Indicators Database:

United States:  $6096 per person annually

Luxumborg:  $5904 per person annually

Finland:  $2664.30 per person annually

France:  $3464 per person annually

Germany:  $3521.4 per person annually

Switzerland:  $5571.90 per person annually

I’m left scratching my head about why Luxembourg is considered more efficient when they only spend $194 less per person each year?  I mean Finland is obviously spending less – with only $2664.30 per person each year, that’s $3,431.70 less spent per person each year.

How do they do it?

Well, another interesting statistic can be had on Nation Master – how often a population visits the doctor, and in the United States we average 8.9 consultations with physicians each year per person; in Finland they consult with a doctor just 4.3 times a year per person. 

So in Finland they use their system about half as often as we do across the population, thus spend about half as much as we do.  Interesting.

Are they really “efficient” as Walker Report thinks they are?

If we spend $6096 on average, for each person each year, and they see the doctor 8.9 times on average in a year, then we’re spending an average $684.94 per doctor visit (or whatever encounter you have – ER visit, hospitalization, etc.)….compare this to Finland, spending $2664.30 per year, per person for 4.3 doctor visits each year – or $619.60 per doctor visit…..now it’s only a difference of $65.33 per doctor visit – not significantly different or more efficient than the United States, huh?

Yet we won’t see these numbers in the media, nor will we hear them on the radio – but the numbers and statistics are out there if you want to find them!

No doubt our healthcare system can be improved – but let’s not rely on myths to reform the system. 

We need facts and data to be able to make good decisions, not myths!

The word “profit” comes from the Latin, to make progress. 

Profit is the difference between the price something sells for and the cost of bringing to market whatever is sold, be it a product or service. 

Within the healthcare debate, we’re told profit is bad, it is a dirty word, it must be eliminated from our healthcare system so that we can deliver quality healthcare to all Americans.

The problem is one of semantics; any business endeavor, whether it is classifed as “for-profit” or “non-profit,” must generate enough revenue to meet its financial obligations like operating expenses and salaries. 

In the for-profit business model, revenues that exceed the cost of doing business are “profits”, whereas the same excess in the non-profit sector is termed “surplus”. 

No matter what you call it, it’s the same thing, more money in than money going out. 

The damning of profit however is an extremely effective way to terminate any discussion of alternatives or options to the current system we have because no one from within the healthcare system is going to step up and say “but profits are good” or anything related to money.

It’s manipulation pure and simple – carefully crafted and designed, then repeatedly executed well, by those who wish to keep the focus on establishing a single-payer universal healthcare system in the United States.

How can anyone have a meaningful discussion of the state of our healthcare system if you don’t talk money?

There is indeed much discussion on the demand side of the equation, that is the cost to those who need healthcare and virtually no discussion about the supply side of the equation, the costs to those delivering healthcare.

We absolutely must open the discussion up, take it beyond its cost to patients, and look at all sides if we are going to fix the areas in our healthcare system that need fixing and address the issues that are important to us all – the quality of our healthcare, how and where to better manage costs, and how to reach out to and provide affordable coverage to those uninsured among us.

Share your thoughts on this matter in the comments!