income falls below a certain level. Governmental intervention will be needed for unemployed individuals with no income.
What’s Wrong with the Conservative "Robin Hood" Proposal?
Since employees would lose their untaxed benefits
some kind of boost in their salary would have to take place to offset that loss.
They would then be taxed on this new money and would have to pay for their own
insurance plans as well. This would provide government with a new source of
taxes and extinguish the healthcare burden of small businesses and corporations,
as their funding of employee healthcare would be abolished. Millions of people
will then have to purchase their own insurance and those without coverage now
would add dramatically to insurance company coffers by required purchases with
their "tax credits."
But the effectiveness of such a plan is unknown. The
AMA, for example, has no specific numbers nor have they proposed a particular
level of tax credits. AMA analysts estimate that 25 million currently uninsured
individuals could be covered by this plan at a cost of 40-65 billion dollars
(i.e., new money coming from increased taxes on those employed.) Analysis
conducted by the Lewin Group for the AMA finds at best only 8.6 million people
currently uninsured would be covered at a cost of 64 billion dollars leaving 35
million uninsured.
Even with a subsidy provided by tax credits, people wanting insurance are going to have to spend some of their own money. The AMA has examined plans offering tax credits of $20000-$4000 per family. With family coverage costing them $6,000-$10,000 per year, even low income would be paying thousands of dollars for health insurance. And those families would have to prove to some public agency that their income was low enough to deserve tax credits. Would insurance companies really seek such people? We doubt it. Under the Conservative plan, middle and upper income families would have to be asked to pay upwards of 100 billion dollars in taxes to effectively cover subsidized insurance for all working and unemployed families. Giving an additional 100 billion to the wasteful, profit driven insurance industry isn’t the most effective way of addressing the uninsured in this country that would only cover a small portion of the uninsured.
The Conservative Scheme would encourage an even more
destructive competition between insurance companies than exists now. In order
for plans to be affordable, premiums will have to be reduced along with
benefits. For those with chronic health conditions, the situation will be
particularly bleak. Insurance companies will either not provide coverage or
raise premiums for very little coverage. Finally, for those in the 43.6 million
who are required to purchase coverage with their "tax credits", the
situation will also be poor since they will be priced out of truly comprehensive
insurance plans.
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