Federal Health Care Plan - Should We or Shouldn’t We?

Where do you stand on the issue of a Federal Health Care Plan?

I’m on the side of reform  but I don’t think the plan announced on Tuesday is a viable solution.  (Reports can be found at The New York Times (may require a log in),  The Wall Street Journal,  NPR and Forbes, among others.)  

I’d like to believe a Federal Health Care Plan is possible.  However, I’m not convinced that our representatives in the House and Senate 1) are qualified to design a workable Federal Health Care Plan or have determined the best qualified team to help them design such a plan,2) have a clue as to how to pay for such a plan, and 3) are taking the time needed to develop a plan that meets the existing gaps.  

I appreciate that President Obama wants to take action and he wants a plan that saves money and is implemented quickly.  Respectfully, Mr. President, please don’t feel the need to assign another Czar to a compensation-related field especially if they don’t have the necessary expertise. This issue is too complex and too important to shove through quickly.  

Following are the basics of the proposed plan: 

• Income surtax on wealthiest Americans to help pay for ~$1 trillion cost of health care overhaul over 10 years beginning in 2011.  
• Surtax is expected to raise about $544 billion, affecting 1.2% of households.
• If expected cost-savings in health care system don’t materialize, the tax would go up in 2013.  

Adjusted Gross Income		Surtax Rate
Individual	Couples/Family	2011	2013
$280,000 - $400,000	$350,000 to $500,000	1.0%	2.0%
$400,000 - $800,000	$500,000 to $1 million	1.5%	3.0%
Greater than $800,000	Greater than $1 million	5.4%	5.4%

Using 2011 rates, the surtax is calculated as follows:

• A family earning $400,000 would pay $500 in taxes which is 1% of $50,000 (their income above $350,000).  
• A family earning $1 million would pay $9,000 in taxes:  

   $   500,000 - $350,000 = $150,000 x 1.0% = $1,500 

+ $1,000,000 - $500,000 = $500000 x 1.5% = $7,500 

$1,500 + $7,500 = $9,000

• The bill would create a new government plan to compete with private insurers, starting in 2013.
• Individuals would generally have to maintain health insurance, except in cases of hardship as defined by the Treasury. Those without coverage would have to pay a penalty in the form of a new tax.
• Coverage could be purchased by individuals from the new government plan and those with low to modest incomes could get federal aid.  If they have access through an employer to health coverage but it would cost more than 11% of their family income, they could sign up for the government plan.  
• Employers not providing coverage will be expected to pay a fee or penalty:
• No more coverage exclusion for pre-existing conditions
• Limits on annual out-of-pocket spending.
• Expanded Medicaid coverage to individuals and families with incomes at or below 133% of the federal poverty level.  
• Reduced costs of Medicaid, Medicare and other existing systems through a series of cost saving measures.  

Big Deal or Not?

While the percentages don’t seem large, when you’re a small business owner and keeping the doors open and people employed are your priorities, $5,000 a year can make or break your business.  These businesses don’t want their employees to not have health coverage, but they do want them to have jobs and having to pay the required fee/penalty or to provide health coverage will almost certainly further reduce the US workforce.  

By 2019,  the government estimates state this bill could reduce the number of uninsured by 37 million (according toDouglas W. Elmendorf, director of the Budget Office)while still leaving 17 million without insurance. Of those 17 million, nearly half would be illegal immigrants.  

In the end, 17 million (even 8.5 million citizens) is not an insignificant number, nor is the nearly $320 billion shortfall in funding.  

Again, I’m for reform, but I think they’ve missed the boat with this proposal. Perhaps we need some compensation and benefits expertise in Congress to tighten up the plan?

I’ll ask again, where do you stand on the issue of a Federal Health Care Plan?  What do you think of what the House has proposed?

 

Terri Albee, CCP, is managing partner of HR Ops Team LLC, which provides scalable and affordable human resources services, ensuring human resources structures are in legal compliance, streamlined for funding or exit events, or just optimized for day-to-day operations.  Terri has planned and managed HR operations in a variety of industry verticals from start-up organizations to the Fortune 500, domestically and globally.  Her experience encompasses design, implementation, compliance and management of compensation, benefit and equity plans at all levels.

Comments

[Doug Sayed]

Thanks Terri for this fantastic summary! I support healthcare reform, but the program seems pretty light on the "reform" part. I just don't see where there are any meaningful cost savings, just a lot more spending, and taxes. The small business tax being proposed is particularly troubling, as well as the "soak the rich" tax for many people who don't feel all that rich.

[Becky Regan]

Terri,

You've consolidated a lot of the key points into one great info source. I second Doug's comments and agree with you on all points! Loved your comment about not needing another Czar!

One more question: do you have any recommendations for how to best let our legislators know that we don't support this version of health care reform? I thought about contacting their offices, then also thought about the Chamber of Commerce. Let me know if you have any suggestions.

Becky

[Terri Albee]

Doug & Becky, thank you for your kind words.

Becky, as to your point about contacting our representatives offices, here is a link - http://www.congress.org/congressorg/home/
there is a place on the left and near the top to enter your zip code and find who your reps are and how to contact them.

The US Chamber of Commerce is actively seeking comments on their website: http://www.uschamber.com/default

Excellent suggestions!