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12/8/2009
Time to go after health insurance execs
As if they needed another excuse to attack high income-earners, Senate Democrats have found one in ObamaCare.
The story:
Sens. Blanche Lincoln (D-Ark.), Frank Lautenberg (D-N.J.) and Robert Menendez (D-N.J.) have sponsored an amendment that would prohibit health insurance companies from deducting more than $400,000 in executive compensation per individual. The cap would apply to companies that earned 25 percent or more of their income from Americans who buy insurance from government-created exchanges.
…“Our amendment will make sure that premiums these new enrollees are spent on better care and not executive salaries,” (Lincoln) said.
It doesn’t decree lower executive pay: it makes it more expensive for a company to have high-end executives on the payroll.
First thought: This will have the exact opposite effect of what they intend. Companies may not be able to meet the Senate's demands. Or they may simply not want to. The result: less money will go into "better care," because more money will be spent on taxes.
But then I thought: waitaminute. It’ll only apply to companies which “earned 25 percent or more of their income from…government-created exchanges.”
Well, how many companies is that? I’m going to guess: none. They'll all stay under 25%, at least at first. Payrolls will remain obscenely stratospheric, bless them.
So maybe this amendment is just window dressing. Just two Senators trying to curry populist favor with their anti-capitalist base. Their amendment attacks the rich, and pleases the covetousness that lies within all human souls: but it leaves a big loophole – the 25% standard – so the insurance companies won't make a stink.
Could be.
But then I thought: wait another minute. That might be a loophole now. The number of people taking the government cheese might be so small that this isn’t an issue…now. But we all know – or we strongly suspect – that the public “option” is quickly going to become the “go-to” option. Its ranks will swell, and quickly.
So how long will it be possible to stay under 25%? How long until insurance companies are refusing new enrollees, to stay under that line? And how long will Congress allow them to do so?
And wouldn’t that be ironic, if people began having trouble finding coverage because government rules made the carriers shy?
Anyway, next thought: Maybe instead of creating an actual loophole, they’re creating what looks like a loophole in order to keep the insurance companies happy now, knowing full well that, eventually, every insurance company will have to comply.
I wonder what the enforcement mechanism will be. I mean, if the feds find out that the Burri Insurance Corporation is sucking at the government teat for 26% of its income, but is paying owner and CEO…oh, let’s just call it an even million a year, with stock options and a company car.
What will the feds do? Pull all the “public option” customers? Force them to use some other company? Even if they like the coverage they have?
Final thought: if the Green Bay Packers tried to field a team made entirely of players making the league’s minimum salary…would that be a good thing? Yes, for Chicago and Detroit and Minnesota, because the Pack would be the easiest win on their schedules.
The difference between football players and insurance executives is: it’s easier to measure a football player’s value.
Do top executives deserve the gold-plated contracts? Are they really so important to their companies' success?
Senate Democrats had better hope not, or else their plan puts the insurance industry at risk. In fact, if sheer populism wasn't the simpler explanation, I'd think that was their plan.
Lance Burri blogs regularly via his site, The TrogloPundit.
COMMENTS
[blockquote][i]"So how long will it be possible to stay under 25%? How long until insurance companies are refusing new enrollees, to stay under that line? And how long will Congress allow them to do so?"[/blockquote][/i]
Lance, you're such a skeptic about our government. Ever hear of, "Hi, I'm from the federal government and I'm here to HELP you!" They're just trying to provide health insurance..., er, I mean health CARE for all our loyal citizens.
But I'm just curious, as perhaps you are, if insurance companies might find a way to cherry-pick customers, such that they'd only take those with the best record of personal health. Sort of like mortgage lenders used to do before Barney Fraud and his liberal crooks started to trash our economy.
I think our comfort level would be greater if those in Congress would be jumping up and down yelling, "I can't WAIT to get myself signed-up for this insurnace scheme!"
Duke (Tue Dec 08 08:05:48 2009)
My, my, Lance. You as a taxpayer are sure generous. If a CEO like United Health Group's William W McGuire makes $342 million over a five year period, as he did, and it is deducted as a corporate expense, as it was, doesn't that mean that the taxpayers are already paying these exorbitant insurance CEO salaries?
Jack Lohman (Tue Dec 08 10:29:41 2009)
Ah. So: NOT paying taxes is a government subsidy. Because I don't pay sales taxes on groceries (as the law permits), that means the taxpayers are subsidizing my groceries.
Is it then also true that those who pay a smaller portion of taxes are receiving a larger subsidy? For example, I am one of those 49% (or so) of Americans who pay no federal income taxes. Am I receiving a subsidy? I do pay state income taxes. Is that, then, no subsidy, or just a smaller subsidy?
Lance (Tue Dec 08 11:16:56 2009)
I don't know your obviously special status that allows you to avoid federal income taxes (unemployed, incarcerated, ???) but whatever, yes, I'd call that being subsidized. Is there any doubt?
Jack Lohman (Tue Dec 08 11:39:27 2009)
Jack, a subsidy is a transfer of money. The government writes a check and gives it to you. That's a subsidy. If a tax break - that is, paying less in taxes - can be defined as a subsidy, then the government really does own all our money already. It means that the government is allowing us to have it.
My children have toys. I, as their father, can take those toys away for whatever reason I think appropriate. Not taking a toy away isn't the same as giving that toy. Your way of thinking says otherwise. And it puts us in the role of children, and the government in the role of parent.
Lance (Tue Dec 08 12:22:02 2009)
Taxes are necessary, and the only place we disagree is what should be covered by them. I want an honest political system that does not reward campaign contributors with taxpayer assets, and the savings spent on a universal healthcare system for all. You could care less about either, and frankly, don't seem to understand what drives taxes in the first place.
And please, tell me how you avoid taxes. If it's legal I want some of that.
Jack Lohman (Tue Dec 08 14:09:51 2009)
The cap would apply to companies that earned 25 percent or more of their income from Americans who buy insurance from government-created exchanges.
Please note the above. This has several implications. The $400K is only what they can "deduct!" CEOs can still make $50 million per year, they can only "deduct" (have the taxpayers subsidize) $400K of it. But they can get around that by setting up a special company to serve all of their "government-created exchange" patients, take zero compensation from it, and put the rest in profits.
So Lance, please don't worry about the CEOs and executives. They will find a way around the law. Lincoln and Lautenberg are no dummies. They know how to look like progressive heroes without upsetting their funders.
What I'd really hope to hear from you is "damn, why are they jumping through so many hoops when for zero dollars they could provide Medicare for everybody."
I won't hold my breath.
Jack Lohman (Tue Dec 08 14:30:21 2009)
For zero dollars? Jack, are you nuts? Or deaf, blind and oblivious? Or just so blindly committed to your belief that it makes you naive?
Jo (Tue Dec 08 14:35:50)
No Jo, if we did it right, with a single-payer system funded via the infrastructure rather than through wages and lost economy, we could provide health care to 100% of our people for the same 16.5% of GDP we are spending today. See How Much Would a Single-Payer System Cost?
Actually, for $400 billion less, but to expand that to include vision and dental eats up the $400 billion saved.
We'd save 31% by eliminating the insurance bureaucracy and spend the money on health care instead. And we'd eliminate the burden from employers and allow them to better compete with product from other countries.
Jack Lohman (Tue Dec 08 15:08:36 2009)
Dream on Jack...
...though I do appreciate your passion and your commitment to researching the issues.
To change the subject... how important is it that Americans maintain (well, I should say, redevelop, remember from our founders, reinvent, re-create) a strong sense of, commitment to personal responsibility?
Jo (Tue Dec 08 15:41:42 2009)
On your new subject, Jo, I'm inclined to say "Dream on," but I won't because that would be giving up and I believe that it is critical that we re-establish personal responsibility. But we can't rely on just invoking our Founders. They were good but far from perfect, and they didn't foresee the corruption that would ultimately imminate from their words in the 1st Amendment.
I volunteer-teach a 2-hour class to 8th graders called "Choices," like, how good ones and bad ones stick with you for life and what the consequences are when not moving on to higher education.We should be giving that to parents instead.
I believe in Work for Welfare, not welfare alone. Volunteer time if need be, but work! But it is damned hard touting integrity when our politicians, our nation's board of directors, are constantly in taxpayer's pockets solely to gain funds for their re-election.
I wish the Right felt as wronged.
Jack Lohman (Tue Dec 08 16:16:33 2009)
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