I was listening to NPR this morning on the way to work and a discussion brought me out of my daze. Apparently part of the “health care reform” plan backed by Obama includes taxing the employer-paid portions of our health plans.
I tend to stay out of politics because 1) I don’t do anything directly to influence them and 2) know that without participating in politics, I shouldn’t complain about them (aka “armchair politician”). But when I hear about something substantive that could affect my livelihood, my ears perk up.
In this case, the plan, which is ever-changing, is to tax a portion of your medical plan premiums paid by your employer. For those of you participating in employer health plans, you may not be aware of how much your employer covers out of their pocket.
For instance, we pay about $200 a month for our medical plan (I paid only $100 per month at my last employer). That covers my spouse and I. But while I might pay $200 out of pocket, in reality, that’s probably only 20%-50% of the total cost of my insurance. If you’ve ever shopped around for a medical plan out-of-pocket, you’ll know how expensive they really are.
That’s why this subsidized health care tax bugs me so much. One of the arguments mentioned on NPR was:
Because workers don’t pay taxes on health benefits received through their employers, they’re effectively getting benefits at a discount.
Um, excuse me, there’s no discount here. I need to have health insurance. While I know it’s an option, and many people do without it, it’s not one I’m willing to go without, especially after seeing so many lives ruined from lack of insurance coupled with debilitating accidents or diseases.
What am I getting a discount on? Just because the government thinks it should tax everything, it means I’m “saving money” by not paying taxes on these subsidized premiums? Apparently they’re comparing me to people who pay their full premiums out-of-pocket, or don’t have health care at all. How about instead of taxing me, provide a tax deduction that levels the playing field.
Supposedly this tax has a “good purpose”, which is to make the consumer more cost-conscious of health care spending. The flaw in this argument is that the proponents of the tax think the average consumer is 1) aware of the true cost of medical procedures and 2) able or willing to argue for lower prices or against inappropriate charges. Perhaps in addition to a personal finance class in high school, we should also require students to take a “Medical Billing 101” class?
Basically, Obama is using this tax to get around his promise to not tax those making under $250,000 a year directly by taxing indirectly. While I think the promise was stupid in the first place given all the spending of this current administration, why beat around the bush? Just tax us if you need the money! We know you’re going to eventually, so why lie?
What are your thoughts?