Thursday, August 13, 2009

Healthcare Reform: Tax Relief

A show of hands. How many people believe the 111th Congress would offer tax cuts as part of a health care reform plan?

Oops, I don't see any hands.

OK, that is because you are right. This congress would never conceive of giving taxpayers a break. It's just not in their genes.

But our government has been using tax law to influence the behavior of Americans as far back as 1862. For example, they give tax breaks for buying a home, having children, charitable giving (for now) and for medical expenses over 7.5% of your adjusted gross income (if you file the long form with Schedule A). It has been this way for many decades.

Why do they not allow you to deduct all of your medical expenses? They allow business to deduct all of the Benefits they offer, which include medical insurance expenses, and they do not even need to use a long form. (IRS Form 1120, line 24). I'm sure this situation has a lot to do with the amount of money lobbyists have to offer.

I believe they should continue using tax law to influence Americans (in the way I would, of course) and enact a dollar for dollar tax credit for medical expenses. That would be all medical expenses including doctor, hospital, laboratory fees, prescription drugs, insurance premiums, deductibles and co-pays. This would influence more people to buy their own insurance, maybe start a health care savings account, and pay for their own health care. With a few other reforms, such as tort, Medicare, Medicaid reform and expanding competitive regions, the cost will be reduced, further encouraging personal ownership of health care insurance. Personal ownership would also make portability much easier to realize.

Ya know, I would like to have a tax deductible health care savings account, but government regulation won't allow it due to the health care insurance program I am in. It makes no sense.

Lowering income taxes: Good. Adding new taxes: Bad.

If they wanted to make health care more accessible and save you and I some of our earnings, our representatives could cut taxes on healthcare expenses. As it is, H.R. 3200, includes plans to make everyone, rich and poor, subject to an additional a new tax penalty (Title IV-- Amendments to Internal Revenue Code). It is in the form of a 2.5% fine on individuals without "acceptable" health care coverage. So, congress and the president want to mandate that you spend your money on their committee's version of "acceptable" health care insurance or you will see your taxes go up.

Giving a tax credit, as opposed to the current new tax penalty, would help many more Americans to purchase their own healthcare insurance and remove dependency on bloated government programs. When people pay for goods and services out their own earnings, they are careful to ensure they are getting the most cost effective

I believe government's meddling in the health care arena helps force, I mean "influence", people to move into government sponsored programs, such as Medicare. Medicare looks like a good deal because the true costs are hidden from consumers. Medicare Part B participants only pay about 25% of the actual cost. The other 75% is paid out of the general fund. If we were to ween people off of Medicare that would add 42 - 47 million paying into a private health care insurance plan. Gee another way to lower private sector insurance costs.

Adding people to the government rolls via the "public option", or government option, will only make matters worse.

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