Tag Archives: Taxes

Don’t Listen to the Noise Coming From Naysayers

Quote of the Day re-posted this article from Common Dreams on why those in the Democratic Party are wrong to dismiss Medicare for All. You hear them during the debates, and as any well-informed advocate of MFA knows, their arguments are red herrings and even outright lies and misinformation.

Here is the article:

Published on Wednesday, November 20, 2019 by CNN

Democratic Naysayers Are Wrong on Medicare for All

“Americans know that their current private health care payments, whether insurance premiums or out-of-pocket, are nothing other than ‘taxes’ they pay to stay alive.”

Supporters rally for universal health care in Chicago. (Photo: Shutterstock)

The American political debate over health care is absurd. Americans pay twice as much as any other nation for health care, and then are told daily that they “can’t afford” to switch to a lower-cost system very similar to those of Canada and Europe. If President Donald Trump and the plutocratic Republican party were the only ones carrying this ridiculous message, it would be understandable. Yet this message is also coming from media pundits aligned with the Democratic Party and the most conservative wing of the party.

Let’s be clear on the central point. Medicare for All, as first proposed by Bernie Sanders and endorsed by Elizabeth Warren, is affordable precisely because it is cheaper, much cheaper, than the current system.

America’s health care system relies on local monopolies (such as a health care provider centered at the sole major hospital in a city) and national monopolies, notably pharmaceutical companies holding exclusive patents.

In other countries, the government sets delivery prices and typically pays the health bills through the budget. In the US, the monopolists set the prices.

The sky-high revenues end up as huge corporate profits, wasteful administrative costs, useless and even harmful advertising and lavish salaries. Health care CEOs are making gargantuan salaries, many exceeding $10 million per year.

Who loses? Almost all Americans, whose insurance costs and out-of-pocket outlays inevitably lead to lower income because of unaffordable health care costs, untreated chronic illnesses, premature mortality and personal bankruptcies. Single-payer systems such as in Canada and Europe are cheaper, fairer and have better outcomes.

A recent international comparison of the performance of 11 national health systems on five main dimensions (care process, access, efficiency, equity and health care outcomes) ranked the US health system dead last.

Despite all of this, the US pundits profess to be alarmed about the prospect of Medicare for All. There has been a wave of op-eds and columns published (for example, here and here and here) declaring that Medicare for All would lead to massive tax increases, and that Sanders’ and Warren’s support for Medicare for All threatens to reelect Trump. It’s ridiculous.

Both Sanders and Warren poll well against Trump, ahead in the overall popular vote (though like all Democrats, facing headwinds of the Electoral College).

And at this stage of a national campaign, the goal should be to explain to voters the vast benefits of a single-payer system rather than to prejudge the politics based on self-fulfilling fear-mongering.

Yes, one way or another, taxes would rise with Medicare for All, but private health outlays would go down by much more. Total health costs would fall.

That idea is not so hard to understand.

One influential pundit, economist Paul Krugman, has come around. In the 2016 election cycle, Krugman railed against Medicare for All. Yet after Warren laid out her proposal, Krugman supported Medicare for All. In truth, he was simply returning to the economically sound observations that he had long made before 2016.

The pundits seem to believe that Americans will rebel at “higher taxes.” Actually, Americans are much smarter than that. They know that their current private health care payments, whether insurance premiums or out-of-pocket, are nothing other than “taxes” they pay to stay alive. They’ll agree to pay higher taxes to the government if those new taxes eliminate larger private health care bills — again, there are “taxes” by any other name — that they now pay.

Some mainstream pundits are simply repeating what they hear from Democratic Party conservatives and centrists, the wing that has been dominant since Clinton’s election in 1992. They are following the lead of Nancy Pelosi, Pete Buttigieg and others who are trashing Medicare for All.

What in the world are these leading Democratic Party politicians doing in opposing the transition to a fairer, more efficient and lower cost health care system? I would suggest it’s not a lack of understanding. It’s the power of campaign financing. These Democrats are funded by the status quo. The health sector contributed $265 million to federal campaigns in 2018, of which 56% went to Democrats. The sector spends nearly $500 million per year on lobbying. Money talks. Meanwhile, Americans go bankrupt or die early.

There remains the issue of the best way to raise budget revenues for Medicare for All. The basic answer is to use progressive taxation to fund the program. In this way, the nation as a whole will pay much less for health care and the vast majority of households will as well. The highest income households will end up paying a bit more because their funds will not only finance their own health care but will help to pay the health care costs of the poorest households as well.

Sanders rightly proposed a menu of options to pay for Medicare for All, including payroll and income taxation. Warren has proposed one specific approach: progressive taxes on the super-rich and the corporate sector but also a surprisingly regressive “head tax” on companies. She took great pride in not charging a penny of new income or payroll taxes on middle class households. But the proposed head tax on companies would hit wages indirectly and regressively.

Still, both Sanders’ and Warrens’ approaches would result in a more equitable and less expensive system. For most households, overall health care costs will decline.

The most worrisome thing about Warren’s statement as she introduced her Medicare for All plan, is her emphasis on “not one penny” of new middle-class taxes. Here we go again. The Democrats have, for far too long, copied the Republican mantra about “no new taxes,” even as our public debt soars, our infrastructure and public services collapse and inequality reaches stratospheric dimensions.

To honor the silly stricture of “no new taxes” directly paid by middle-class households, Warren ended up endorsing a regressive head tax paid by the employer, which would end up hitting lower-wage workers even though its paid by their employers.

Let’s hope this blunder is a one-time stumble for Warren. Most importantly, both Sanders and Warren are pointing the correct way to reform America’s costly, unfair and inefficient health care system. And this is a goal that most Americans support.

Jeffrey D. Sachs

Jeffrey D. Sachs is the Director of The Earth Institute, Professor of Sustainable Development, and Professor of Health Policy and Management at Columbia University. He is Special Advisor to United Nations Secretary-General Ban Ki-moon on the Millennium Development Goals, having held the same position under former UN Secretary-General Kofi Annan. He is Director of the UN Sustainable Development Solutions Network. He is co-founder and Chief Strategist of Millennium Promise Alliance, and is director of the Millennium Villages Project. A recent survey by The Economist Magazine ranked Professor Sachs as among the world’s three most influential living economists of the past decade. Sachs is the author, most recently, of The Age of Sustainable Development,” 2015 with Ban Ki-moon.

Opinion | Universal Health Care Might Cost You Less Than You Think – The New York Times

Today’s New York Times Opinion piece on universal health care is a timely one, given the attempts by the medical-industrial complex and their allies to derail any move towards health care for all. It is even more important now that the 2020 Democratic primary campaign is gaining momentum.

GOP Tax Reform: Say Goodbye to the Middle Class

As a student of American Social history, I am acutely aware that for much of the 241 years of the Republic, the majority of the American people were not what we today would call “Middle Class.”

In fact, they were cash poor, dirt farmers, tradesmen, owning very little except what they could carry on a horse, mule, or in a wagon as they migrated west in search of better opportunities.

Until the New Deal, the Middle Class as we know it did not exist in such great numbers. True, there was a middle class in the cities and towns of the East Coast and Midwest, but most of them were descendants of immigrants from the 17th and 18th centuries, and rose steadily into the middle class as the nation’s economy shifted from a mercantile to an industrial economy in the first half of the 19th century.

Consider the following quotes from three US presidents regarding the power of money and corporations. You will notice that none of them are wild-eyed radicals in the least.

“I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country.”

Thomas Jefferson

“Mischief springs from the power which the moneyed interest derives from a paper currency which they are able to control, from the multitude of corporations with exclusive privileges… which are employed altogether for their benefit.”

Andrew Jackson

“I see in the near future a crisis approaching that unnerves me and causes me to tremble for the safety of my country. Corporations have been enthroned, an era of corruption in high places will follow, and the money-power of the country will endeavor to prolong it’s reign by working upon the prejudices of the people until the wealth is aggregated in a few hands and the Republic is destroyed.”

Abraham Lincoln

So it is no surprise that the Republican Party is ramming down the throats of the American middle class, a tax reform bill that will effectively wipe out the remaining members of the middle class, and redistribute the wealth to those making over $75,000 and those at the very top, the oft-mentioned 1%.

My fellow blogger, and unsuccessful Democratic candidate for County Legislator in upstate New York, Joe Paduda, wrote a very potent analysis of the GOP tax scam legislation. Yes, I did call it a scam, but that is not my word. Others have used it in the past few days in an effort to derail and stop it from passing.

Besides destroying the middle class, it will as Joe points out, bankrupt the health care system. Then we will have to go all the way to a single-payer system just to get the whole thing working again.

Here is Joe’s piece in its entirety:

The tax bill’s impact on healthcare or; If you like your cancer care, you can’t keep it.

        

The GOP “tax reform” bill will directly and significantly affect healthcare. Here’s how.

It removes the individual mandate, but still requires insurers to cover anyone who applies for insurance. So, millions will drop coverage knowing they can sign up if they get sick.

How does that make any sense?

Here’s the high-level impact of the “tax bill that is really a healthcare bill”:

The net – healthcare providers are going to get hammered, and they’re going to look to insured patients to cover their costs.

The real net – The folks most hurt by this are those in deep-red areas where there is little choice in healthcare plans, lots of struggling rural hospitals, and no other safety net.  Alaskans, Nebraskans, Iowans, Wyoming residents are among those who are going to lose access to healthcare – and lose health care providers.

Here are the details.

According to the Commonwealth Fund, “repeal would save the federal government $338 billion between 2018 and 2027, resulting from lower federal costs for premium tax credits and Medicaid. By 2027, 13 million fewer people will have health insurance, either because they decide against buying coverage or can no longer afford it.”

Most of those who drop coverage will be healthier than average, forcing insurers in the individual market to raise prices to cover care for a sicker population. This is how “death spirals” start, an event we’ve seen dozens of times in state markets, and one that is inevitable without a mandate and subsidies.

For example, older Americans would see higher increases than younger folks. Here’s how much your premiums would increase if you are in the individual marketplace.

So, what’s the impact on you?

Those 13 million who drop insurance, which include older, poorer, sicker people, will need coverage – and they’ll get it from at most expensive and least effective place – your local ER. Which you will pay for in part due to cost-shifting.

ACA provided a huge increase in funding for emergency care services – folks who didn’t have coverage before were able to get insurance from Medicaid or private insurers, insurance that paid for their emergency care.

From The Hill:

[after ACA passage] there were 41 percent fewer uninsured drug overdoses, 25 percent fewer uninsured heart attacks, and over 32 percent fewer uninsured appendectomies in 2015 compared to 2013. The total percent reduction in inpatient uninsured hospitalizations across all conditions was 28 percent lower in 2015 than in 2013. Between 2013 and 2015, Arizona saw a 25 percent reduction in state uninsured hospitalizations, Nevada a 75 percent reduction, Tennessee a 17 percent drop, and West Virginia an 86 percent decline.

If the GOP “tax bill” passes, hospital and health system charges to insureds (yes, you work comp payer) are going to increase – and/or those hospitals and health systems will go bankrupt.

What does this mean?

It means we of the middle class had a very good run, but the ruling class has spoken, and they want us to disappear, or at least shrink to the point that we become unimportant to their pursuit of greater wealth. Why else would the donor class of the Republican Party, the Koch Brothers, the Mercer family, Sheldon Adelson, and the rest of their donors threaten members of Congress with no more funds for their re-election if they fail to pass this bill?

There is a word for that, it’s called Extortion. And we are the sacrificial lambs.

Beware the IRS: What to Know Before Using Medical Tourism for Group Health Plans

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From the ‘I didn’t know that department’:

Last week, I happened to find on my computer, a file I downloaded in late January entitled, Medical Tourism and Group Health Plans by Marcia Wagner, an ERISA lawyer in Boston. I am not sure when exactly Ms. Wagner wrote this article, but I was intrigued to find out what she had to say about medical tourism and group health plans.

Much of the first page of her article is basic information that is already known about medical tourism, and some of the data she presents may be debatable, but what I found on the second page was the most interesting part of her article.

The article was written in the form of a question and answer format, so the question at the top of page two, “Are medical tourism benefits taxable to participants?”, was what I focused my attention on.

According to Ms. Wagner, any amounts paid by a group health plan for the hospital stay and expenses associated with the medical procedure are not taxable to the employee. However, costs associated with transportation and lodging are unclear. Ms. Wagner states that costs associated with travel are treated as medical care, as are costs associated with lodging (provided there is not an element of personal pleasure, recreation or vacation).

Ms. Wagner cites IRS Code Sections 105(b), 213(d)(1) and 213(d)(2) as proof of this. These sections can be found in the following two IRS documents: Publication 502 – Main Content and Topic 502 – Medical and Dental Expenses.

If the group health plan pays these expenses, Ms. Wagner says, then the payments would not be taxable to the participant. This would go a long way to get employees on-board with medical tourism, yet there is a catch to this as we will soon learn.

This assumes, she continues, that with respect to lodging, there is no element of personal pleasure, recreation or vacation. However, in order to be exempt from taxation, the lodging must be essential for medical care and the medical care must be provided by a physician who is licensed and providing services within the US. (Code Sections 213(d)(2) and 213(d)(4). Therefore, Ms. Wagner states, the cost of most lodging in a foreign country would most likely be taxed to the employee.

This is where some employers may decide it is too risky and too burdensome to bother with to save some money on expensive surgeries.

In addition, if a doctor prescribes an operation or other medical care, and the taxpayer (i.e., employee) chooses for purely personal reasons [Emphasis added by Wagner]to travel to another locality for the operation or other medical care, Ms. Wagner writes, then medical care does not include the cost of transportation or lodging (unless as part of the hospital bill). It is Ms. Wagner’s opinion that any decision to travel to a foreign country for medical care would be considered by the IRS to be for purely personal reasons, especially if the participant receives a financial incentive. Here is where the catch comes in, as she states on the third page.

“Any incentives that group health plans or plan sponsors pay to participants electing medical tourism would be taxable to the participants.”

Ms. Wagner goes on to state that costs for travel and lodging would be taxable to the participant; yet without any guidance, the taxability of transportation and hotel expenses related to medical tourism is unclear currently. Meals, however, are a different story, as they are taxable if they are not part of inpatient care.

Finally, Ms. Wagner discusses the issue of prescription drugs. She says that the cost of a prescription drug is not taxable to the participant if it is a drug or biological which requires a prescription issued in the US by a physician licensed and performs the medical service in the US. Therefore, any prescriptions issued and filled in a foreign country would be taxable.

Ms. Wagner’s article goes on to discuss other issues with medical tourism and group health plans, but it would seem that the IRS has made it somewhat clear, if not yet definitive, that medical tourism under group health plans are taxable to the employee who elects to take advantage of this option offered to them by their employer. How companies currently engaged with medical tourism abroad for their group health plans are dealing with this issue is not exactly clear, and I have not found or heard of any company not doing so because of these IRS rules.

If there are anyone out there who does know how companies are dealing with this issue, it would be very informative to the rest of us. It would seem to this writer who is not a tax accountant, nor a tax lawyer, that until the medical tourism industry here in the US can figure out how to deal with this, they may find getting employers and their employees to choose medical tourism for health care will be difficult, if not impossible. Large employers may just pay the taxes themselves as a courtesy to their employees, but smaller employers may balk at doing so. And that is where medical tourism must look to attracting if it really wants to make an impact on health care in the US.

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