Wednesday, August 1, 2007

Health Insurance & Taxes

Well, Rudy Giuliani sent out his health care plan today. so there are now three visions for voters here in the Fifth and the rest of the nation to pick from.

Giuliani's plan hinges on a $15,000 tax credit for families to buy their own insurance. I'm not sure if Giuliani's staff realizes the median gross income for families in the United States was slightly over $46,000 in 2005. The idea of half the nation having to put up roughly 32% of their income up front and wait for a refund check the following year could have disastrous implications for the economy. To me, it seems this is another area where a theoretical fix doesn't meet the reality of the situation.

Right now, we have 15% of the nation uninsured. How many more would lose their coverage and not be able to front the $15K is a mind blowing figure to contemplate. It's tough to gauge how many people that is, but even if the plan is more like TransitChecks there is only so much a family can lay out for health care up front. Would lack of demand for services start to bring costs down? Maybe, but it's more likely more people would have to wait until they're in the emergency room and the hospital crisis would worsen at light speed.

Speaking from personal experience, this plan is a non-starter for me. If my employer chose to drop my health coverage since I get a $15,000 tax cut, I wouldn't have insurance due to cost. It's that simple. On another angle, a small family business owner I know currently pays over $60,000 a year for his coverage, so it's a start for him but once again he's laying out a tremendous amount of money.

I'm still working through the John Edwards plan and the Barack Obama plan. From a practical standpoint, even with their shortcomings each seems more likely to work in the real world. However, of concern to our District is that both candidates intend to fund their respective plans by allowing tax breaks to expire that particularly affect our District.

Whenever the national discourse turns to wages and income, no one ever talks about cost of living. If I made what I make and still lived in West Michigan, I'd own a small house as opposed to looking for an apartment with my brother. It costs roughly 34% more to live in North Jersey than in West Michigan, not including the astronomical property tax difference, and 40% of households achieve what the IRS deems as the top 10% of earnings (over $104,000). Simply looking at the numbers blindly doesn't work if we're talking about fairness and shared responsibility.

The government has formulas to determine government aid caps based on location. If income taxes are how we're going to fund healthcare, then there needs to be a better formula of taxation as opposed to simply looking at numbers on a page. If that gets developed, the AMT would also need to go away otherwise the reforms wouldn't apply to our District.

As far as our District goes, the fact our current Representative Scott Garrett ranks in the bottom 5.5% of the influence on Capitol Hill is not going to help us make the case for some sort of cost of living adjustment to be in there. The fundamental questions for our District should be what do we want, and do we have a Representative capable of getting as much of it as possible? Right now, the answer to that second part is probably not.

Health care reform is coming, one way or the other. It has to, as costs are wrecking the budgets of families and our nation's economic competitiveness. It should be an interesting debate to watch.

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