Wednesday, July 4, 2012

Health Insurance Tax Credit

The idea of taxing an individual who does not have insurance, seems to be a method of taxing never before seen.  Show me a tax where inactivity triggers it. Saying inactivity does not protect you from some type of tax ignores that activity would not also protect you.
The biggest problem is the tax is not big enough to make it an economic incentive to purchase Health Insurance. 
Provide an economic incentive by increasing everyone's income tax rate, and offering a Health Insurance Tax Credit. . Nothing prevents congress from raising income tax rates, and nothing would prevent them offering a tax credit. Inactivity does not trigger the tax.
It seems its doing it the same way, but you could have increased the tax on some to be higher than average cost.  But since the current method increases your tax when you don't purchase health insurance, and it could not be punitive by being higher than the price of insurance. But increasing a person tax rate can always be done. Looking back at National Taxpayer union website pulled (July 4th, 2012)  We see rates of over 90 % at times for income over 200,000.
So Congress could increase the income tax rate, of all tax payers. The higher income levels would have their rates increased to a spot higher than the cost of insurance and lower income. The size of the credit would be income based.
A person with income above the poverty level, could have a larger credit, as you reach higher incomes they would receive a credit slight less.
Each year would be adjusting the tax rate and credit to best fit insurance rates.. Hoping the price of the insurance would go down over time. As the insurance pool would be increased and the amount needed to cover the cost of treatment would go down. Even the cost of treatment would go down as you may be able to get earlier diagnoses.
Stu Burguiere analysis would be correct. as soon as preexisting conditions are covered, companies would drop their insurance plans, setting up some money to cover some things, and then only have people part of the plan when they need the insurance.  But with this possibility, insurance rates would have to be increased for everyone. But that would drive people away from insurance and just pay the small fine. Could health insurance premiums be cut enough to encourage people to get the insurance over paying the fine?
I wonder if we could set up a game, an online game, and let people play out the effects of the health care laws. Call it SIM Insurance or SIM  Health Care, and maybe we could play out the effects of the law before we get to far in and find out we have major problems. I would enjoy playing this game.

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