BitaTruble
Posts: 9779
Joined: 1/12/2006
From: Texas
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The average cost for a family of four for health care premiums is about $12,100 with the employer paying approx $9000 of that and the employee paying about $3300.
Source: National Coalition on Health Care
The size of the average family as of 2006 is 3.2, but you can't have a .2 person and the data is from 2006, so I'll round up and just call it 4. Mom, Dad, two kids and Fluffy the cat.  We're working with hypotheticals at the moment anyway, since there is no guarentee these plans will even be passed by Congress. Feel free to click my links to do your own math for your own family size.
$72,758.24 is the average median income for a family of four
Source: Median income - Family of 4, single earner (I added all the incomes from all the states then divided by the number of states to arrive at the $72k+ number. I excluded the Common Wealth and U.S territories information because I couldn't find compatible insurance data for those areas. At this point, this is an imaginary plan, so imaginary numbers should be fine. I just want to see bottom lines anyway but I'd bet these are going to be pretty accurate when we get some real data from the camp.)
Okay, so far so good. We've got some numbers to work with now so can apply McCain's plan and see how we do. I'm excited, are you? ::giggles::
Most folks already know about the $5000 per family ($2500 for singles) tax credit to help offset the cost of taxing employer provided health care benefits. (I know all you forumites are savvy critters and knew about the tax on your health care insurance, but for sake of clarity, I thought it should be pointed out in case this ever gets into the Journal of Stuff you do when your Master is out of the Country and you have too much time on your hands)
I'm going to go ahead and use the current tax calculator for the IRS then adjust for McCains plan since we don't have actual calculator tiers yet.
($72,758.24 gross income + $9000 health care tax - $7,000 personal exemptions for married filing a joint return - $10,900 standard deduction) = $63.858.24
Tax liability on $63,858.24 = $8776 - $1290.07 (deduction for McCain tax tier reduction ) = $7485.93
$14,000 child tax credit exemption (increase from $3500 to $7000 per child x 2 children)
$7485.93 - $14000 = -$6514.07 (since tax credits are only used to offset taxes, that means that your total tax liability is zero.
With me so far?
Okay, now let's apply that $5000 to be paid directly to your insurance company.
$12,100 - $9000 employer paid benefit - $5000 tax credit paid directly to insurance company of your choice (including the company you may current use) = -1,900 (unlike the child tax credit which can only be used to offset taxes, the health insurance tax credit surplus can put into a health savings account to be used to pay for actual medical expenses)
Wait a minute. Zero tax liability, free health care insurance plus $1,900 into a health savings account? Woot! I'm rich! I'm .. I'm .. wait a minute. That can't be right. Who's going to be paying for all this free stuff?
Unlike exemptions, tax credits are subsidies. That's a fact. Subsidies must be taken from somewhere else. They don't grow on trees after all! Bottom line - either the rich are going to be paying for all my new freebies or the budget deficit is going to go up. There's no two ways about it. Since the rich are getting all those freebies, too, that leaves one option. The budget deficit goes up and the only way to offset that cost is to cut government spending. Period. There's no other way.
No problem though as McCain has promised to freeze all non-essential discretionary spending (he didn't specify how long that was going to last). Right now discretionary spending includes the Department of Homeland security, the Department of Defense and the mysterious 'other operations of government' (which would include things like the Department of Justice, education, transportation, agriculture, Housing and Urban Development .. well, you get the picture. Just click the link for a full list).
Anyway .. back to our number crunching!
I get to choose my own health insurance in any state I want ... but, my employer is paying $9000 for my health insurance which effectively means that group insurance is gone and it would cost him the same thing it would cost me to provide health insurance. In other words, this plan takes away any incentive for an employer to provide me coverage because it puts into place huge rolls of red tape (not to mention it's a great big pain in the ass) for my employer in the event all the employees want insurance from different states in different amounts. It seems to me that rather than give me benefits, my employer would get a lot less headaches if he stopped my benefits and just increased my salary by an equal amount. Either way, my bottom line remains the same. I have the extra cash taxed at the same tier to purchase my insurance. That new big screen television looks pretty good but I'm responsible so I'll spend my raise on insurance. Oh yes I will! And who knows, I might find some insurance in Podunk that offers better coverage at cheaper rates. That'll work. I may get even more $ than I was already going to get.
Well, this all sounds too good to be true!
Um, yeah.
That's because it is. We have our example of the average family who makes around $75k per year. They're going to do okay with this plan as long as spending really is slashed (and, like I said, nothing is free so there are consequences to that action) except, even for them, it's not sustainable. This plan is projected to increase the budget deficit by upwards of $10 trillion dollars which means that McCain will need to slash at least that amount plus inflation factors plus unforeseen expenses .. like if we have another war, another Katrina .. damn near another anything. In addition, he'll have to convince Congress to not only pass this plan but to keep Bush's tax cuts permanently or the whole thing is going to go to shit twice as fast.
The family who is living paycheck to paycheck and doesn't currently have insurance is not going to start buying it even with a $5000 tax credit. The working poor are going to remain poor. The super rich are going to remain super rich. In other words, folks. Status quo. McCains plan is meant to be phased in over time and in the first few (3 - 5) years, it actually looks pretty good but somewhere around the year 2013 when inflation starts to catch up with that $5000 tax credit, we're going to start seeing some losses in this plan that effectively amount to 68 million people who won't have insurance by the year 2018.
$7000 child credit, corporate/personal income tax cuts, talking of more bailouts, keeping Bush's tax cuts, $5000 health tax credit, interest on our current debt, the two wars .. that shit starts to add up and while it sounds good in theory, that it will create jobs and stimulate the economy .. we've tried this trickle down thing before .. and it didn't trickle down. The rich got richer, the poor got poorer and I don't see one damn thing in this plan that is going to flip that scenario around in the long term. I've heard this song and dance before and it's the same song and dance we hear every four years when some yahoo is trying to get his ass elected. The only thing that is really different is that health insurance is going free market .. but, guess what, there are no oversites in this plan, no regulations .. no nothing. That could take months to years to implement with Congress (you have heard of Congress right?  ) having to approve it all.
Don't forget my fellow collarme posters, the advice we often give to folks .. if you keep doing the same thing over and over and expecting a different outcome ... well, you know the rest.
Oh and for the record, Obamas plan doesn't do any favors to the deficit either but that would be another thread.
So, bottom line - do you trust McCain to keep his word and do you trust that Congress going to cooperate so that he can actually do that? Congress has about a 10% approval rating, so I'm thinking I don't much feel like trusting them to do anything.
YMMV
_____________________________
"Oh, so it's just like Rock, paper, scissors." He laughed. "You are the wisest woman I know."
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