Withholding

So there's this guy on that guy's radio show - the one with the "mega-dittos" - and he's talking about health care reform and how it isn't needed and we're all a bunch of babies and I can't help but think that a normal point that Rush makes about taxes is also a big problem in the discussion of health care in this country. Rush always says that if you had to go and pay your taxes in full, in cash that there would instantly be a tax revolt, but that the practice of withholding covers how much we actually spend.

Not surprisingly he didn't make the point to the guy on the phone.

Excited guy on the phone was all like "We have the greatest insurance through my wife's work, all we ever pay is $20 for an office visit." This guy is a spouse and they have kids, and I guess he is also either ignorant or delusional - or (I guess I do have to include the possibility) his wife's union has negotiated the greatest health insurance plan in existence - one so good that actually nobody has it.

Those $20 co-pays are cool, yeah? Makes you feel like you don't have to pay anything ever. Dude should look at his wife's pay stub. He might see some things that would make him a little less enthused. First thing is he might see an "employee contribution" for the health benefit. Something you pay every month whether you go to the doctor or not. At work we have a plan with $20 office co-pays. My recollection is that I would have to pay $100ish dollars a month more in employee contribution to get it. But since the employee contribution is withheld rather than paid some people might not notice it.

Spouses of some people might not notice it either.

Next thing he might see is that there's a charge to cover him. He doesn't have insurance on his own or through his work, he gets it through his wife's work. Does he think that's free? Ok, I guess I can conceive of a union arrangement that throws in spousal coverage, but my ability to conceive it and the reality of it existing; I just don't know. In all likelihood his wife is paying a fee, month after month to insure him. When I got married, my wife and I discovered that the premium for me to cover her was much more than the employee contribution for her to cover herself at her work. So we have two different insurance plans even though we largely go to the same doctors and pay out of the same bank account.

And even if he's covered for nothing as a spouse there's simply no way his kids are a throw in. So that's an employee contribution, spousal coverage fee, dependent fee, and a second dependent fee. I'm guess that on top of those $20 per visit fees (and don't get me started on how they came up with that number - what could possibly actually cost $20?) this family is paying in excess of $3000/yr in health insurance that he has absolutely no idea he's actually shelling out. That could easily be on the order or 10% of his wife's salary taken off the top.

Do you think people would be less concerned about a rise in their taxes if they were conscious of the amount they were actually already paying?

Would people be open to taking a 5% rise in income tax if their employers could all give them a 10% raise?

And really the benefit would be even more than that, yes? Because the employer probably is paying something too, if not for the riders than for sure on the base policy for the worker. So that money could go into pay raises (or into price cuts for goods & services - either of which translates into more money in our bank accounts).

And that's without figuring any savings from efficiencies.

I pray that this guys wife doesn't get laid off. He's in for a rude awakening if he has to start making COBRA payments on that insurance. Under those circumstances as an individual you pay the worker and the employer share for everything. I wouldn't be surprised to find their hypothetical $3000 in pay withholding translates into more that $5000 in COBRA payments.

If the administration wants people to be in favor of change, they have to shatter the "$20 office visit" myth. Even if it does help Rush Limbauh make a point about the income tax.