Monday, January 6, 2014

Puzzling Over Medicaid

I have proposed a 50% federal tax credit for paying for someone else's health insurance. Payments to an insurance company or 501(c)(3) charity would be reported to the IRS, and the IRS would apply half the amount reported to federal income taxes owed. This tax credit would:
  1. double what some people now pay in taxes,
  2. reduce the burden on doctors who accept Medicaid, and
  3. extend the solvency of the Medicaid fund, which is expected to go into the red by 2024 at the latest.
 Who might be interested in such a proposal? Here are a few examples:
  1. Parents of low-income children over 26 who live in "Medicaid gap" states. 
  2. Children of low-income parents over 55 who do not want the Medicaid estate recovery program (MERP) to take the family assets after death.
  3. Church members who want to help the poor people in their congregation.
  4. Women's rights activists who want to give low-income women access to all reproductive choices despite Medicaid restrictions.
  5. Immigrant groups that want to help Medicaid-eligible individuals get coverage without disclosing the immigration status of their family members.
In my online discussions about this idea, I have encountered a handful of objections. These include:
  1. "You just want to privilege church-goers." (Rebuttal: I think many church-goers would be willing to pay twice what they now pay in taxes. Maybe I'm trying to exploit church-goers!)
  2. "Why shouldn't the state claim all the assets from a person who goes on Medicaid?" (Rebuttal: the so-called "Death Tax" only takes 40% of the assets from billionaires. Why take 100% from the working class?)
  3. "This doesn't help the people who don't have wealthy family and friends." (Rebuttal: overloading the Medicaid system hurts the people who need it most. This frees it up as a true safety net for the truly destitute.)
  4. "It's a tax break for the rich." (Rebuttal: no, it's a tax break for the working class. Tax deductions are fairly valuable to people in the top tax brackets, because they can save about 39 cents on the dollar by giving money away. People in the lowest bracket are just as generous, but they get 10 cents of the dollar for their donations. A tax credit levels the playing field for altruism.)
  5. "Medicaid may be cheaper than insurance." (Rebuttal: yes, and you get what you pay for. Why not help people get better medical care at lower overall cost to the taxpayer?)
The only objection I haven't encountered yet is the only one I can't get around--"your system might actually work, which would keep Medicaid from crashing, after which the federal government would have to create a single-payer system."

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