Tuesday, July 31, 2007

Giuliani's Long-awaited Health Care Plan

Today, Rudy Giuliani announced his plan for cleaning up the health care system. Under his plan, each family gets $15,000 in tax credits with which to buy their own health insurance. If, after paying for premiums, the family has leftover tax credits, they can use them to pay for out-of-pocket expenses.

The plan has some merit. 1) If the system works, it would remove some of the burden for health insurance from employers who have been struggling to provide a reasonable benefit for employees in the face of sky-rocketing health insurance costs. 2) Using tax credits ensures that the money is spent for insurance and nothing else. The amount, $15,000, should be enough to cover most families depending on the plans they choose.
3) The program supports the medical savings account concept which encourages people to take responsibility for costs just as they do with any family budget item, thereby influencing costs by their purchasing decisions. It gives the consumer more power in the marketplace.
4) In the plan, leftover funds are also able to be rolled over year-to-year and used, as necessary, for medical expenses.

Some questions about the plan have yet to be answered such as how some people with prior conditions will be able to get into a plan. Once they leave an employer group plan, consumers are left to the whims of the insurance community who have been unwilling to allow even healthy individuals into their plans if they have been diagnosed with certain conditions in the past. Those who would be interested in an individual plan would most likely be employees with employers that do not currently offer affordable insurance. Insurance companies often refuse to insure consumers who have been without insurance, or, interestingly, those who have not seen a doctor within a year or two. Clearly, some changes or additions would have to be made to make this a workable program, but the concept certainly has promise.

One bit of information Giuliani has yet to give is his estimate of the cost to taxpayers for such a program—not a minor issue.

7 comments:

AZAce said...

A CBS News/New York Times poll ranked health care as the top domestic issue and the No. 2 concern overall (the war in Iraq was #1). A Kaiser Family Foundation poll showed that, among Republican voters, health care surpassed immigration for the first time as the No. 1 domestic concern.

Sirocco said...

Well, probably because so many are now having to deal with the health care system to deal with the after-effects of the strokes they suffered while working themselves into a high dudgeon over the late, unlamented immigration bill.

Sirocco said...

A $15,000 tax credit isn't a whole lot of help if you don't have $15,000 in taxes owed.

I suspect those who are most likely to not be able to afford health care are also likely to be those who pay little or nothing in taxes ... meaning a tax credit system doesn't help them one iota.

Framer said...

Sirocco,

For those who do not pay taxes, there are really a slew of government funded options available already. Make a nickel over 40,000 a year, and all of the sudden you are in health insurance hell, especially if you own your own business, as you will get little to no government help.

This plan my not be perfect, but sometimes it is OK to help people out who DO pay taxes.

It would be helpful if they let me deduct this from my quarterly federal withholdings rather than at the end of the year, however.

Sirocco said...

Framer,

I wasn't addressing solely those who don't pay taxes (who, recall, are supposed to "visit the emergancy room" for all their health care needs).

I was pointing out that a large number of people don't even pay $15,000 a year in taxes, and as such wouldn't be able to benefit fully from any such credit. To _fully_ benefit, you would need to owe 15K _after_ taking out all deductions (child credits, mortgage deductions, etc.).

That's going to benefit those of us making 6-figure incomes or higher a lot more than it's going to help someone with the average wage.

Sirocco said...

I wanted to wait until I got home to confirm this, but now I want to put one set of actual figures into play as an example.

I make a six-figure income. Not high six figures, but a good income, well above the national mean, median, however you want to define it.

After taking all deductions for mortgage interest, IRA contributions, 401K contributions and so on, my total tax payments owed last year were slightly above $13,000.

Even I could not have used all of a $15 K tax credit. How does this really help the majority of taxpayers? I mean, it's better than nothing ... but ultimately, it benefits the well off and rich more than the majority.

ccburro said...

I agree with SIROCCO. It would mainly help upper-middle income people. The median income for Pima County households was $37,500 in 2003. The Guilliani proposed tax credit would not be a significant help to most households.

FRAMER--For small businesses in AZ, I've gotten the impression that Healthcare Group of Arizona offers reasonably priced health insurance. http://www.healthcaregroupaz.com/