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1/19/2011
Shown: WI Democrats Should Support Walker's HSA Tax Credit
Over the last two years, Democrats nationwide have portrayed themselves as the party of transformational change on the issue of healthcare. Wisconsin Democrats have the opportunity to demonstrate this worthy commitment when they vote on Governor Walker's proposed tax credit for Health Savings Account contributions, possibly as early as this week.
As part of Governor Walker's special legislative session, he has proposed a tax credit for income deposited in a Health Savings Account. Within limits, HSA deposits are already free from federal taxes and forty-eight other states offer a tax credit for these deposits. Despite these facts, there is fierce opposition to Walker's proposal. The two Democrats on the Senate Health Committee, the three Democrats on the Assembly Health Committee and the four on Joint Finance all voted against the bill during recent committee meetings.
So why oppose a tax credit that so many other states have adopted?
One possibility is that animosity toward Governor Walker, felt by so many on the left, means they will oppose any and all of his proposals, regardless of the merits. This is disappointing since so many of the same folks have been lecturing the national GOP for the last two years about their constant opposition to President Obama's agenda.
The reason most often cited by Democrats for their opposition to HSA tax credits is the additional cost to the state. I'm skeptical by nature so maybe I'm being too hard on them, but does anyone believe that Wisconsin's Democrats have had an epiphany on fiscal responsibility? I'm more inclined to believe any such commitment is tied directly to the party of the governor. After all, they didn't demonstrate any such commitment in the last budget produced under Governor Doyle.
Beyond that, if tax expenditures are such a problem for Wisconsin Democrats, how do they explain their behavior during the last campaign for U.S. Senate? Candidate Ron Johnson was attacked for simply mentioning a possible modification to the mortgage interest deduction while Senator Russ Feingold was hailed for his defense of the same.
Perhaps opposition by organized labor is the reason Wisconsin Democrats oppose this plan. It makes sense for politicians to take their cues from a large constituency, but why does labor oppose HSAs? Is there any evidence that workers are hurt by health savings accounts? That certainly hasn't been my experience.
If Democrats in Wisconsin are serious about transforming our healthcare system, one small but important step they should take is a vote in favor of Governor Walker's proposed tax credit for contributions to Health Savings Accounts. If they are unwilling to do even this, any talk of commitment to health reform is just that, talk.
Jeremy Shown blogs at Rhymes with Clown and frequently hits on politics and economics in Wisconsin and the U.S.
COMMENTS
>>>So why oppose a tax credit that so many other states have adopted?<<<
So Jeremy you then speculate that D's are just being obstructionist even though you have a better explaination from your links:
>>>Madison -- The Republican plan to give a tax break to high deductible private health savings accounts would increase the deficit $48 million in the next two years, create no jobs and would not increase access to health care. The plan is to be debated today at a joint legislative health committee.
“Wisconsin deserves a straight answer to two simple questions,” said Scot Ross, One Wisconsin Now Executive Director. “What are the jobs this tax break for the wealthy will create, and what will Republicans cut to pay the $48 million cost?”<<<<
Dean Weichmann (Wed Jan 19 05:28:50 2011)
I have been paying for my own insurance for many years with a high deductible HSA. The Health Care reforms passed by the previous Congress have made a huge positive impact in my ability to remain an independent business person and to hire people who are able to survive on their own individual policies. So, what does Walker want to do? Waste state money by joining other state attempts to eliminate the law or significant parts of it. By the way, the CBO says the health care reforms will save money but the current House chose to exempt their repeal attempt from the Paygo rules . How's that for reducing deficits! Yes, I'll take some benefit from the HSA exemption. Big deal. The real positive impacts that I see in the reforms Walker would do away with if he could. With Walker I'd have no health care but get a deduction for the pleasure. Walker has done nothing to increase revenue or save money. All he has done is give away more and more and increase the deficit.
dave allen (Wed Jan 19 07:41:32 2011)
Dave, do you appreciate your federal deduction for your HSA?
Jo (Wed Jan 19 07:55:54 2011)
I'm sure the bankers would love the favorable tax treatment on HSA's, but HSA's are an absolutely stupid mechanism that does more to reduce employer costs than provide health care to employees. I recommend against them, but of course, I am not funding the elections.
But it seems to me that the Dems are not the problem. The R's are running the state, and if they can't get enough to vote in favor, then I give those dissenting R's great credit.
Jack Lohman (Wed Jan 19 08:08:28 2011)
Interesting from:
One Wisconsin Now
A study from the federal Governmental Accountability Office showed the following about the skewed benefits of HSAs:
- The average adjusted gross income of HSA participants was $139,000.
- Nearly half of HSA participants reported withdrawing nothing from their HSA, evidence that it is serving as a tax shelter for wealthy participants.
- The highest income participants in HSAs had a much higher contribution to their HSA, proving that it is a benefit in which the wealthier derive more of a benefit than middle class earners.
[Government Accountability Office, 4/1/08; Center on Budget and Policy Priorities, 5/19/08]
Jack Lohman (Wed Jan 19 08:14:04 2011)
Why would it surprise anyone that there would be universal opposition across parties. That has become par for the course currentlu led by the house majority dedicated to repealing everything passed by the democrats. Nothing will happen until one party or the other decides to change the current modus operendi! Geeze!
billie (Wed Jan 19 08:15:35 2011)
Jo,
My Federal HSA deduction (and the state one to come) are not very significant in the final analysis. Nothing on the tax side is very significant to the self employed when the real issues are cost and obfuscation. In 2014 that will start to change as I will be able to join large buying cooperatives and not be a second class citizen as I am now compared to the large company programs. That is of course, if that part of the law isn't repealed.
dave allen (Wed Jan 19 08:49:41 2011)
Dave, I doubt that you'll get sympathy from Jo, as she supports HSAs. But they are designed to keep the for-profit banks and insurance companies in the loop. They discourage patients who have little excess cash from going to the doctor until it is too late. Study the reports on this page.
The most efficient form of healthcare is a single-payer system, but that is the LAST thing the insurance interests want. Or conservatives, whose politicians are often on their payroll. But it would be in the best interest of our corporations and expand the job market.
Jack Lohman (Wed Jan 19 10:00:50 2011)
Jack, You are right about HSAs and single payer systems. Unfortunately the very people who rail against such change are people who (often) benefit from employer paid plans. So, they never see what's really going on. I think the tax deduction for health care should be eliminated for everyone (including the corporations that are people too). Then, we'd see the mess we're in without all the smoke and mirrors. As far a Jo goes, I don't know what insurance she has and have challenged her many times to give it up and get an individual HSA policy. She hasn't responded so I assume she likes her coverage where she is and wouldn't want to join the totally paid by yourself HSA pool like me. Jo, it's your forum, tell everyone what insurance benefits you get that you don't pay for.
dave allen (Wed Jan 19 13:22:50 2011)
Jack, does an AGI of $ 139k for a Self-Employed business filer seem excessive. After reading your numerous posts, it appears your predominant attitude is one of income orientation. Without a sound audit of each individual filing, this attitude is " guilty with no presumption of innocence. " Leave this land to a socialistic form of governance or remind yourself that we live in a system of good until proven guilty of harm.
Richard Parins (Wed Jan 19 21:53:38 2011)
Richard, what in the world gave you the idea that I felt an AGI of $139k is too high or too low, or your wild presumption of guilt theory? I am simply saying that no employee should be forced into an HSA or anything else, and that all employed and unemployed should be allowed entry into the Medicare system. If you are a smart businessman you'd look at the tradeoffs and options and agree with me.
Jack Lohman (Thu Jan 20 01:14:29 2011)
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