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Saturday, January 27, 2007

Bush Goes Left

While many folks are touting the "market based" health plan the President described this week, the truth is that as a whole, it's a pretty liberal idea.

Robert Reich, former Secretary of Labor under Bill Clinton, proposed decades ago that (employer provided) health coverage should be considered taxable income. That is a big part of the President's plan. To pay for the $15,000 ($7,500 for singles) tax break for insurance premiums employer provided plans would become taxable income.

Supposedly the "market force" part of the plan is that you, as the consumer, would look for a cheaper plan at work, to reduce your tax burden and maximize your deduction.

However, a lot of that is beyond the employees control. Most companies work through one, maybe two insurers. So while you might be healthy as an ox, and not need much coverage, your employer's insurer of choice may not offer the economical choice you are looking for.

The flip side is you might just be a heart attack waiting to happen, or have issues that keep your premiums higher. Because of that you end up with a higher tax burden due to the cost of coverage.

The best advice for young, healthy folks is to take minimum coverage, and open an HSA to cover deductibles, etc, and enjoy the tax breaks. For those who need more coverage, you probably should take it, but still take the HSA, to help with the tax impact that those higher coverage costs may add to your taxes. (I'm not a tax planner, seek professional advice on these ideas if Bush's proposal goes through).

The funny thing about this whole thing is that Democrats hate the idea, though it's similar to ideas they pitched while Clinton was in office. Probably more proof of Bush Derangement Syndrome. Even when he proposes one of their ideas, it's wrong because he pitched it.

Instead, they'll say that a single payer system (Think Canada and Britain) is the solution, even though Canada is changing their system because it's inefficient, and been found unconstitutional there. Britain has a single payer system, with market based help available for those who can't stand the idea of 6 month waits for MRI's and treatment.

For the record, I do have insurance, but not provided by my employer. For tax reasons this proposal would be a god send for me, as my premiums are low, and out of pocket. I'd see a huge tax break, probably moving me down a bracket come tax time.

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