lostjumper

I've copied a section of anlysis from John David Lewis, A professor at Duke. He does a great job of explaining the Legalese contained in the Healthcare bill. He quotes the bill verbatim, and then offers his analysis.

It will be much cheaper to pay the 8% tax than for a company to pay for private health insurance. Meaning, in just a couple of years almost everyone will be forced to go with the government option when their company cancels private health insurance. The government will have a monopoly on health insurance, and the 8% tax won't be enough to cover costs, meaning the government will go into debt even more. Other things to consider are the hundreds of thousands of employees in private insurance that will be jobless, and the loss of billions in tax revenue that the government currently collects. It just doesn't add up.

BelichickFan

That's pretty much what's been said and those saying it are accused of being crazy conspirators. Not only are medicare and medicaid way over estimates, they also underpay hospitals dramatically. When the flow of events happens as you describe and we're the rolls of "medicare" expand, hospitals will be further hit. At which point we bust the budget even more or limit procedures. It's a perfectly logical flow of events, not some crazies with tin foil hats.

This is why we should START healthcare reform by trying to lower costs, through tort reform and allowing interstate insurance. And see where that gets costs first. Until we contain costs the numbers don't add up and we can't make this big new plan hoping costs will be reduced, it needs to be shown first then we can look at the numbers.

sdaniels7114

Yeah but right now employers who don't offer health plans don't have to pay any sort of tax at all. This enormous pressure you're talking about should have chased all business insurance plans away years ago.

The reason companies don't get rid of it as it stands is because they can provide something to their employees at a cheaper cost than the individuals themselves can get on the open market. They can 'pay' their employees $300 a month in insurance benefits with it only costing them $150. the 8% tax is just one more reason to not cancel insurance plans, along with the crappy production a company would get from having a bunch of suddenly uncovered employees.

lostjumper

That makes no sense. If Company A offers health insurance to their employees at a cost = to 20% of their payroll, and Company B just pays the 8% tax, Company A is at a severe disadvantage. Either they are going to have to charge more for their product or service, or try to drastically reduce costs in other areas. Or, they can just dump their health insurance and pay the 8% to level the playing field, while their employees get government healthcare. Isn't it obvious what Company A will eventually have to do? If the government runs health insurance, there will be no private health insurance.

sdaniels7114

Yeah, and for the last 100 years company A could have struggled along providing insurance while company B didn't. At least under this bill company B has to pay something.

According to your thinking there's no reason at all for company sponsored insurance to have ever come into existence.

Keep in mind that the penalty does not get anyone insurance, its a fine so to speak. Like in MA, if you don't have insurance you pay extra on your state taxes, that doesn't get you insurance.

ljuneau

I'm going to assume with confidence that you are not an entrepreneur and know almost nothing about the pressures of running a small business. Just saying.

__________________
“If you have been voting for politicians who promise to give you goodies at someone else's expense, then you have no right to complain when they take your money and give it to someone else, including themselves.” ~ Thomas Sowell

Patters

Not sure of his qualifications: John David Lewis -- http://www.classicalideals.com/cv.htm

Seems to me he's reading only a piece of the bill, which may be a mistake on his part or an act of dishonesty. The section he's referring to is called "SEC. 313. EMPLOYER CONTRIBUTIONS IN LIEU OF COVERAGE. "

In sec. 311, the phrase "Contribution in lieu of coverage" is defined as follows:

House Health Care BIll (Pages 101-150)

"Beginning with Y2, if an employee declines such offer but otherwise obtains coverage in an Exchange-participating health benefits plan (other than by reason of being covered by family coverage as a spouse or dependent of the primary insured), the employer shall make a timely contribution to the Health Insurance Exchange with respect to each such employee in accordance with section 313."

It appears to say that an employer makes a contribution even for employees who are on their, e.g., spouse's insurance, and that's what the section in question is referring to. The section is not giving an employer a discount on the public plan (which cost has not yet been set).

My guess is it will work like company-provided health insurance plans work today. The employer pays most of the cost of healthcare, and the employee chooses the plan he wants (at different out-of-pocket costs) based on his personal situation.

In any event, estimates show that an employer pays about 8% of compensation in the form of health benefits:

How much of my wages goes to health care? - Gut Check- msnbc.com

Bob McTeer, former Federal Reserve bank president:
Bob McTeer

Tell me about it. I’m not a health-care or health- insurance expert as are several of my colleagues at the National Center for Policy Analysis, including its founder and president, John Goodman. According to the Bureau of Labor Statistics, nearly 8 percent of employee compensation is in the form of health benefits. That is the percentage of employee compensation employers pay. If you add the employee portion of insurance premiums, co-pays and non-covered health care expenses to that, the total would likely be close to 10 percent.

PatsFanInVa

Well done Patters.

Once again, people, this stuff is

1) NESTED, and
2) ALWAYS dependent on the definitions.

The guy playing cut-and-paste quoted above has either willfully or ignorantly missed the point: These contributions are in relation to an employee voluntarily forgoing coverage.

Still: This is WAY better than where we've been lately (the nyah nyah nyah nyah level of discourse.)

If this is what's going on nationwide this mess may just turn into a gigantic civics lesson. (Okay that's a bit much, but at least it may serve that purpose for a few.)

PFnV

Patsfanin Philly

Not necessarily, it will depend on the salary of the employees (on average) and the break even point. Suppose you own a business where the employees are highly paid (relative to the national average) say $75K on average. 8% is $6000 per year or $500 per month. If the cost of the health plan is less than $500 per month (and for an individual it is)or less, it's cheaper to give coverage.
If your employees are lower paid, say $25K per year, an 8% tax is $2000 per year or $160 per month and is cheaper than providing insurance. I haven't seen this mentioned but it is rational behavior.

Harry Boy

There is a reason that these "Old White People" yell and scream at the Town Halls, they have watched the Left Wing Democrat's and the Rabid Bush Haters do the same thing in the not to long ago past and they saw that by adopting the Left Wing Type Of Protesting (yell, confront, rowdy) that it would draw attention and that attention would eventually bring RESULTS, the Cops that gave Rodney King his thrashing can verify that one, Rodney got 4 million and the cops went to jail.

THESE OLD "WHITE BASTARDS" ARE TO OLD TO TIP OVER CARS OR STEAL TV'S BUT THEY ARE MAKING THEMSELVES HEARD (they are as american as apple pie)

__________________
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In The Absence Of Law And Order Society Will Surely Destroy Itself