BCT Editorial – 1/28/07

This page was last updated on January 28, 2007.

Tough sell; Editorial; Beaver County Times; January 28, 2007.

Do they teach logical thinking and analysis in journalism school?

Below is a detailed critique of the subject editorial.

“When it comes to health-care coverage, not all incomes are equal.”

[RWC] As you will read below, the editorial misrepresents income.

“President Bush touched on this inequity in his State of the Union address on Tuesday.

“‘I propose two new initiatives to help more Americans afford their own insurance,’ the president said. ‘First, I propose a standard tax deduction for health insurance that will be like the standard tax deduction for dependents. ‘Families with health insurance will pay no income or payroll taxes on $15,000 of their income. Single Americans with health insurance will pay no income or payroll taxes on $7,500 of their income. With this reform, more than 100 million men, women, and children who are now covered by employer-provided insurance will benefit from lower tax bills.

“‘At the same time, this reform will level the playing field for those who do not get health insurance through their job. For Americans who now purchase health insurance on their own, my proposal would mean a substantial tax savings - $4,500 for a family of four making $60,000 a year. And for the millions of other Americans who have no health insurance at all, this deduction would help put a basic private health insurance plan within their reach.’ What the president didn’t say was that under his plan employer-provided health insurance, which is now treated as a fringe benefit exempt from taxation, would no longer be entirely tax free.”

[RWC] As I cover below, the idea of “employer-provided healthcare insurance” is a myth.

“Let’s take two families of four with an income of $60,000 a year under the present system.”

[RWC] Here is the editorial’s key flaw or attempt at deception. It refers only to wages as income. In reality, your income is made up of your entire compensation package. Depending on the economic value of the job you perform and/or your employer, in addition to wages your income consists of paid company holidays, paid sick days, paid vacation, healthcare coverage, life insurance coverage, matching contributions to 401(k) plans, a pension, et cetera.

As you will see below, these two families don’t have the same income. Ignoring tax effects and other potential fringe benefits, the first family has an income of $60,000/year while the second has an income of $72,000/year.

“The first family must pay for its own health-care coverage, which comes to $1,000 a month. That means its income is reduced by $12,000 a year, one fifth of its total income. The second family has employer-paid health care. In essence, this adds a tax-free $12,000 to its income.”

[RWC] No, the first family’s income is NOT “reduced by $12,000 a year.” Has the editorial author ever seen an income statement or filled out an income tax form? When you incur an expense, it’s added to the expense portion of the statement, not subtracted from the income. Using the editorial’s “logic,” all expenses (clothing, food, housing, transportation, et cetera) reduce income. If this is how the editorial authors calculate income, perhaps the IRS and the PA Dept. of Revenue should audit the authors’ federal and commonwealth income tax returns. <g>

Regarding the second family, it does not have “employer-paid health care.” Though the employer pays the premium, the premium is part of the employee’s compensation. Therefore, the employee really pays for his healthcare; he just doesn’t know it because of the tax-free status of employer-based healthcare coverage. This is the same as Medicare and Socialist Security taxes. There is no “employer contribution;” all of these taxes come out of the employee’s pocket.

Are we to believe the editorial board of a newspaper doesn’t know all this?

“Unfortunately, what Bush has done here is touch the third rail of health-care reform. As the New York Times reported, this ‘would amount to a tectonic shift in the way people get and pay for their health coverage, and it’s historically impossible to win congressional approval for such changes.’

“Even if you don’t agree with his initiatives, you have to give Bush credit for addressing a basic unfairness in the present system that has left 47 million Americans uninsured and millions more underinsured.

“Unfortunately, that’s about as far as it is going to get.”

[RWC] As I’ve shown before, the “47 million Americans uninsured and millions more underinsured” claim is BS. Also as I’ve noted before, not having insurance is not the same as not having access to healthcare. That’s a distinction folks like the Times fail to acknowledge.