Wednesday, May 13, 2009

Health Care Reform Proposals

As I indicated before I will spend some time over the next few days to review some of the proposals for health care reform that are being considered by the US Senate and the Obama administration. Again the opinions expressed here are my own and do not represent the opinions of Cottonwood.

One proposal being considered is that of eliminating the tax exempt status of health care benefits and discontinuing flexible spending accounts. Currently this tax exempt status is a tax break available only to those that have health insurance through employers and unavailable to those without health insurance. There is an anticipated savings of over 200 billion dollars per year on what essentially is a tax hike. But it also is essentially a "salary reduction" on those who have employer sponsored health insurance. These salary reductions do not affect the employers' bottom line as the changes really directly affect the worker. I don't really know what to make of this proposal. On the one hand the "haves" get more through health insurance tax breaks but this is also true for the tax break on home owner's interest payments and I don't think anyone would seriously considering eliminating that.

I am just not sure that a tax increase and effective salary reduction is a good idea in a time of recession. I would love to hear what other people think on this issue and really would like comments. Thanks.

Thought for the day

There are no easy answers.

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