Biden?s Phony Health Care Argument

[BT]

Friday, October 3, 2008
Biden?s Phony Health Care Argument

Joe Biden: Distorting the facts.
During the vice presidential debate yesterday between Senator Joe Biden and Alaska Governor Sarah Palin, the Democratic candidate repeated several misleading and outright deceptive arguments about the McCain health care plan that the McCain campaign needs to take on, and soon. At a minimum, Senator McCain needs to be ready to set the record straight during the presidential debate next Tuesday evening.

My EPPC colleague Yuval Levin has already written an excellent piece for National Review Online detailing the numerous deceptions.

But it?s worth repeating the basic accusation and why it is so patently untrue.

Biden and Obama want to leave voters with the impression that they are going to get a $5,000 tax credit from McCain even though health insurance costs $12,000 per family, on average. Where?s the additional $7,000 going to come from?

Here?s how it would really work.

Suppose a worker gets $50,000 in cash wages and $12,000 in health insurance.

Right now, he pays federal income taxes on the wages but not the health insurance. Let?s assume, for reasons of simplicity, that the tax rate he is paying is a flat 25% on his wages. He therefore pays $12,500 in federal income taxes. His after-tax, after-health-care income is $37,500.

Now, under the McCain plan, his employer keeps paying the premium, which is now counted as income to the worker. He therefore pays federal income taxes on $62,000, or $15,500.

But he also gets a tax credit of $5,000 for health insurance, which means that, all in all, he owes $10,500 in federal taxes, or $2,000 less than he does today. His after-tax, after-health-care income is $39,500.

If the worker decides to buy his insurance in the open market instead of through the employer, the result will be the same. His employer is indifferent to how he pays his worker as long as total costs are the same. So instead of paying premiums, the employer pays his worker $62,000 in cash wages and does not pay anything toward insurance. The worker again owes $15,500 in taxes on this compensation, and he also must buy health insurance costing $12,000. So, his pre-tax income is $62,000, he owes $12,000 in health insurance premiums, and he owes $10,500 in federal taxes (after claiming his credit). His after-tax, after-health-care income is the same: $39,500 ($62,000 ? $12,000 ? $10,500), or $2,000 more than today.


http://www.thenewatlantis.com/blog/diagnosis/bidens-phony-health-care-argument

[Xavier_Onassis]

If you buy your health care through your employer, it will be a group plan, and it will be much, much, much less. This is because insurance companies realize that anyone who is employed is not chronically ill, and therefore a much better risk.

So it is not a valid comparison. The National Review is not to be trusted on such issues. This is an example of why this is so.

[Amianthus]

So it is not a valid comparison.

I'm guessing you didn't read the article. It didn't hinge on buying insurance outside of employment; as a matter of fact, the first example was using an employer's insurance plan.

[Xavier_Onassis]

So instead of paying premiums, the employer pays his worker $62,000 in cash wages and does not pay anything toward insurance. The worker again owes $15,500 in taxes on this compensation, and he also must buy health insurance costing $12,000. So, his pre-tax income is $62,000, he owes $12,000 in health insurance premiums, and he owes $10,500 in federal taxes (after claiming his credit). His after-tax, after-health-care income is the same: $39,500 ($62,000 ? $12,000 ? $10,500), or $2,000 more than today.
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Is this or is this not a comparison that assumes that the worker gets the same price for a health insurance contract from his employer that he gets on the open market?

This is exactly what is looks like to me.

But reality is that a non-group policy will cost much, much more. So this and the rest of the argument is spurious.

I'm not buying it.

They are selling dogshit flavored ice cream at the National Review, as always.

[Amianthus]

Is this or is this not a comparison that assumes that the worker gets the same price for a health insurance contract from his employer that he gets on the open market?

This is exactly what is looks like to me.

They're not saying that everyone will get the same the premiums outside their employer as inside, nor are the calculations hinged on that assumption. I would have thought the statement "If the worker decides to buy his insurance in the open market instead of through the employer, the result will be the same," to have been a clue...

They're making two different hypothetical examples to show how it would work in those two cases. The fact that the calculations work out to the employee saving the same amount if the insurance costs the same does not not seem to deter you much, does it?

[Plane]

They're making two different hypothetical examples to show how it would work in those two cases. The fact that the calculations work out to the employee saving the same amount if the insurance costs the same does not not seem to deter you much, does it?

Is this a serious help to somone who must self insure?

[Amianthus]

Is this a serious help to somone who must self insure?

It's more help than they currently get.

[Christians4LessGvt]

he didn't read the article

btw thanks BT the article clearly exposes another Joe "gaffe-plagiarism" Biden mis-statement

[Xavier_Onassis]

It's just bullshit.

Canadians will continue to outlive Americans, and at a reduced cost.