and the
Citizens Economic Research Foundation

Barbara's Column
March #4

Healthcare reform:
So many expensive options, so few real benefits
by Barbara Anderson

The Salem News
Thursday, March 29, 2007

So here I am, buried under health insurance options and newspaper clippings dealing with state and federal health insurance bills.

Citizens for Limited Taxation has had a good plan with Tufts HMO. Many years ago, we decided, as a conscientious taxpayer group, to avoid taxes by offering benefits in lieu of pay raises -- no FICA payment, no federal or state income taxes on the benefit. It made no sense to us that the system was set up this way; but when in Rome, do what the silly politicians encourage.

We were happy with this for a while, but our pay remains low while the health insurance premium keeps rising and we can't afford the full-service plan anymore. Besides, President Bush wants to tax these good plans to provide tax breaks for individuals who purchase their own health insurance, and I want to get us out of the way of that possible new tax!

Of course, it would be better if all of us could just buy our own health insurance with pre-tax dollars and carry it with us from job to job or unemployment. But once again, those of us who have been paying our share already would be penalized under the Bush plan.

It's like the Massachusetts nursing home tax, which is paid by self-payers in nursing homes to help cover Medicaid patients. I've put a handicapped bathroom next to my bedroom and will refuse to go to a nursing home; I'll spend my self-payer money on visiting nurses and hospice. I am tired of being punished for being responsible by a government that, in general, wouldn't know responsibility if it found it in its soup.

Anyhow, bigger companies than mine have human resource specialists whose job is to understand the complexities of the health insurance system and make the best choice for their employees and their bottom line. I don't have the training for this, but must muddle through because our 2007 premium is increasing 11.2 percent.

My first thought was, drop the whole thing and let the employees go on the subsidized state plan. But as a taxpayer activist, I knew what needed dropping was that fantasy. I've followed the new state health insurance law and know it was drafted so that those of us who have been responsibly paying our share couldn't get a better deal from it.

Of course, we could quit our jobs and become unemployed, then get subsidized. But that would be foolish; because we can't count on the state health insurance law since it isn't finalized.

The concept of the new law -- making everyone take some responsibility for having some health insurance -- was fine. But we now know exactly what is meant by the phrase "the devil is in the details."

While the new law is covering some previously uninsured people now, full implementation - the part that takes your state income tax refund if you don't have insurance - has been put off until 2009.


  • How will the state determine who loses the refund?

  • Will we all have to send a copy of our health insurance plan in with our tax form on April 15?

  • Will a new state agency be going through the multiple available plans to match them up with each taxpayer to make sure all required coverage is included?

  • What if the taxpayer isn't getting a refund, but instead owes money? I think I'd carefully monitor my withholding so I don't get stuck having the state take my overpayment.

    OK, back to work.

    In order to cut our premium, I need deductibles and higher co-pays. Then we can self-insure by setting aside the premium difference each month into a medical escrow account with which we can reimburse employees if necessary. The cheaper plans still cover preventive care; so if we all stay well, there will be a permanent escrow account at the end of the year and we can maybe do a bigger deductible next year!

    Wow, getting a feel for this, moving right along.

    Rx (prescription drugs) or no Rx, that is the next question. I thought that with a cash transaction, no paperwork involved, there might be a cash discount on prescription drugs.

    Not exactly. I'm told that pharmacies have a lower price for insured customers, since insurance companies negotiate caps. So can't tell what we will be charged if we are self-paying. However, we've learned that we can get generic prescriptions for some drugs for $4 at Wal-Mart.

    At present, none of us use the prescription drug benefit much, and I like getting my medicine from the neighborhood pharmacy, where I get free advice from pharmacists who know me and will deliver if I'm incapacitated. But if I find myself unable to afford to subsidize the citizens whose costs are capped, it's nice to know the Wal-Mart option is there.

    Clearly, the trick is to a.)  continue to avoid taxes by getting benefits in lieu of pay; b.)  choose the lowest possible premium and start saving to self-insure for the deductible; and c.)  hope we don't start needing expensive drugs, and that all four employees don't need the deductible reimbursed soon.

    Barbara Anderson is executive director of Citizens for Limited Taxation. Her column appears weekly in the Salem News and Eagle Tribune, and often in the Newburyport Times, Gloucester Times, and Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in the Providence (RI) Journal and other newspapers.