Battle of the Bilge

New Email Regarding Health Care Changes

A new viral email has hit the streets that discusses new taxes on health care provided by private and public employers. While it is rooted in fact, the email leaves out an incredible number of pertinent items, most of all the fact that it won’t go into effect until 2018 and that the actual tax only applies to so called ‘Cadillac’ health insurance plans – those that cost more than $10,500 for individual plans and $27,500 for family coverage. And the tax would only be applicable to anything that exceeds the $27,500 threshold. It also contains a very clear misstatement that the cost of health care will be added to your gross income next year. A response from our Government Relations team follows the viral email.

The Email

You really need to read this……starts nextext year …This is part of the new Health Care Bill.
Contacted my Congressman about House bill HR3590 the health care bill just passed. I asked for a summary of changes.
The aid directed me to go to www.thomas.gov ; enter HR3590 in the search Box and look for summaries.
Starting in 2011 (next year folks) your W 2 tax form sent by your employer will be increased to show the value of what ever health insurance you are given by the company. It does not matter if that’s a private concern or governmental body of some sort. If you’re retired, so what; your gross will go up by the amount of insurance you get.
You will be required to pay taxes on a large sum of money that you have never seen.
Take your tax form you just finished and see what $15,000 or $20,000 additional gross does to your tax debt. That’s what you’ll pay next year. For many it also puts you into a new higher bracket so it’s even worse.
This is how the government is going to buy insurance for 15 % that don’t have insurance and it’s only part of the tax increases.
Not believing this I researched the summaries and here’s what I’m reading:
On page 25 of 29:
TITLE IX REVENUE PROVISIONS- SUBTITLE A: REVENUE OFFSET PROVISIONS-(sec. 9001, as modified by sec. 10901) Sec.9002. “requires employers to include in the W-2 form of each employee the aggregate cost of applicable employer sponsored group health coverage that is excludable from the employees gross income.”
Joan Pryde is the senior tax editor for the Kiplinger letters. Go to Kiplingers and read about 13 tax changes that could affect you. Number 3 is what I just told you about.
Why am I sending you this? The same reason I hope you forward this to every single person in your address book. People have the right to know the truth because an election is coming in November.

MOAA’s Response

This is a classic case of someone taking a fact and twisting it into something else.

Yes, the new law requires an entry on the W-2 showing the cost of employer-provided care.

But that doesn’t mean the employee will be taxed on it. the purpose of including it on the W-2 is mainly to show the employee what the value of the benefit is. As for the tax aspect:

First off, there isn’t any tax on health benefits value before 2018.

Second, there won’t be any taxes imposed on plans that aren’t deemed “Cadillac” plans (which are defined as those costing more than $10,200 for individual coverage or $27,500 for a family plan)

Third, it’s not the employees, but the insurance companies that provide those plans that will be taxed on part of such value – starting in 2018.

Fourth, the tax won’t be on the total value of the plan. Insurers will be assessed a tax equal to 40% of whatever share of the value exceeds the $27,500 threshold. i.e., if the value of a plan is $30,000, the insurer will be taxed 40% of $2,500 = $1,000.

Discussion

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Editor’s Note

Director of Government Relations, Colonel Steve Strobridge, USAF – (Ret.) wrote an article for his As I See It column that was released this Friday. The discussion and comments were going strong but unfortunately ran up against a required database upgrade that stopped the conversation by shutting down our sign in function. Trust me when I say this is a much needed upgrade and despite the week long (expect the site to be back up on Tuesday, January 26th) freeze it is going to be worth the hassle.

Battle of the Bilge does not have the same restrictions so we have reprinted the article here and the discussion can continue. This is based on multiple email requests, thank you for the feedback and for helping us help you speak out about an important issue.

Warmest personal regards,
Matthew LoFiego

As I See It – Scared Straight on Healthcare

January 14, 2009

By Col. Steve Strobridge, USAF-Ret.

As we enter the second decade of the new millennium, most Americans — and most of the military beneficiary population — are scared to death about the future of health care.

And not without reason. There’s certainly no shortage of very real threats. Those fears are heightened further by the Internet and other electronic media that thrive on hype, hyperbole, and our natural tendency to share seemingly outrageous “facts” (which too often actually are outdated “half-facts” taken out of context or even blatant fabrications) with our friends and family.

Throw in a highly partisan political atmosphere in which Republicans and Democrats and liberals and conservatives endlessly trash each other’s ideas and integrity, and everybody’s blood pressure goes up — especially on such a vitally important topic as your family’s health care.

Let’s start with the real threats.

The most imminent one is the crazy formula in current law that requires compounded cuts every year in Medicare and TRICARE payments to doctors. For each of the past several years, Congress has imposed a one-year moratorium on the cuts, because they know allowing the cuts to happen would cause large numbers of doctors to stop seeing Medicare and military patients.

But Congress’ failure to fix the basic statutory formula has meant the size of the annual cut has grown significantly every year.
Now, if Congress doesn’t act before the end of February, current law will require a 21-percent payment cut as of March 1.

Now that’s scary — scary enough that Congress almost certainly will stop it. But they’ll probably just approve a fix for the rest of 2010. Which means they’ll have to act again before the end of the year to stop a 26-percent cut for 2011. Really scary.

As for the next threat, we know it very intimately. Because that threat is us. Or rather me, and people like me. I’ll be 63 years old in April and am among the leading edge of millions of baby boomers who will become eligible for Medicare in this decade.

And Medicare isn’t ready for us. Under current law, Medicare will run out of money in about seven years. The Medicare trust fund actuary says the health care reform bill passed by the Senate would postpone that crisis for another decade — but only if you believe the optimistic assumptions the bill entails, about which the Medicare actuary is dubious.

That means Congress will have no choice but to make further Medicare changes soon — higher Medicare taxes, reduced benefits, or both. Very scary.

Meanwhile, the budget deficit and national debt are rising at unprecedented levels, which means just having the government borrow more money to fund growing health-benefit needs (like fixing Medicare and the doctor payment problem) is a non-starter.

So there will be tremendous pressure in coming years to cut government spending in virtually every area to free up more funds for those critical needs. And that means tremendous pressure on the defense budget, which means a renewal of all the threats we encountered during the tight budget years of the 1970s, ’80s, and ’90s: force cutbacks, pay-raise caps, COLA delays, higher health care fees, commissary threats, and more.

Unfortunately, those real threats often are obscured by new-age “red herrings” — the electronic equivalent of chain letters circulating on the Internet, Facebook, Twitter, etcetera, that assert some kind of outrageous proposal that we send to all our friends with a note asking, “Can this be true?”

Unfortunately, much of that well-circulated material turns out to be bits of old news that’s no longer relevant, things that were originally written as satirical fiction, or blatantly false assertions that started as a joke or to serve someone’s personal or partisan agenda. Nevertheless, it often acquires a life of its own on the Internet, evolving into ever-more-outrageous forms, as amused or well-intentioned people pass them on for months and years — and as the “Can this be true?” comments change to “This is true!”

Several such electronic chain letters assert there is imminent legislation that would require TRICARE For Life beneficiaries to pay thousands more a year for their coverage.

There actually was such an idea, floated by the CBO back in 2008, but it was never a serious proposal, nor was it supported by anyone in the administration or Congress. Nothing like it is contained in any legislation before the Hill.

Are there legitimate reasons to be scared about our health care future? Yes.

That’s why MOAA has several current legislative alerts asking members to urge their legislators to reverse impending Medicare/TRICARE payment cuts, protect military beneficiaries from adverse effects of health reform, and more.

But let’s stay “scared straight” on our facts, and keep our energy focused on addressing real problems rather than fictional ones.

Another Message from Steve?

Yes. There’s a reason he’s our top mind on legislative issues. He’s extremely smart and sensible. Listen to him, and pass it on to anyone you have in your contact list.

Discussion

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“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” -Sun Tzu

Another TFL & Medicare Email

An article that appeared on January 9th on GOPUSA has been picked up by Tea Party sites and forwarded as a viral email raises once again the issue of TFL and retiree health care. Unfortunately, the piece contains scare tactics and assumptions, and paints military organizations in a bad light. The MOAA response is listed below in full from our Director of Government Relations.

The Email

Subject: TriCare For Life & Medicare
Military Retirees, Victims of a Congressional Shell Game

Military piece by Thomas D. Segel Harlingen, Texas, January 9, 2010

Military retirees are very close to losing their hard won Tricare for Life health insurance…and it is their own fault. The sad truth about military retirees is they usually fail to respond when their rights are violated or their futures placed in jeopardy. When viewing voting constituencies, the most dossal and inactive people are found among the retired military members and their dependents.

Any politician engaged in the deceitful practices of Washington D. C. knows one of the easiest targets to attack is the retired military community. Politicians view this group as the least harmful of any who make up the ranks of the voting public. They place those who served in uniform at the top of their least harmful list, thus making them political targets whenever there is a search being conducted to show the public what the political elite call meaningful dollar savings.

There are some strong military retiree advocates who are speaking out on the dangerous situation facing their former comrades-in-arms. One of these is Colonel Wayne Morris, USMC (Ret), who says, “We know that nothing is safe right now when considering the ongoing efforts of the current administration especially in any and all areas aligned with health care! Military retirees will quickly become a ‘soft target’ for those who would take away from one group and give to another.

I personally see a marked effort on the part of the current administration to divide us on this issue – to cause those who are NOT military retirees, (even those now on active duty) to eventually play against us and the benefits we have thus far been able to retain.”In support of this idea, the colonel points out there are some ‘so-called’ veteran support organizations already advising retirees to calm down and not worry about our health benefits.

These groups are telling the veterans that Tricare for Life benefits are safe and that retirees have nothing to worry about. The falseness of such statements can be understood when it is realized that under current legislative plans Medicare will be cut by $500 billion and Tricare for Life is linked solidly to Medicare.

Doing the math anyone can see that such a devastating cut in services and benefits to Medicare would mean similar cuts in Tricare for Life.Additional searching into this healthcare legislation will reveal that, as now drafted, new healthcare rules would require our advanced aged military retirees on Medicare and Tricare for Life to pay the fist $525 of medical costs for the beneficiary and identical costs for any dependent.

The retiree would then pay 50% of the next $4,725 of medical charges up to a total of $6,301 per year. This is the additional financial load our Congress will place on those who have already given twenty and more years of service to their country. Many of who left their blood and body parts on the fields of battle.The Washington version of the old Shell Game has already started. This is a confidence trick where three shells and a pea are used in what is claimed to be a gambling game.

Actually, as the shells are shifted from position to position, the pea is removed from the table…and the player ends up picking NOTHING. In the 2,000 plus page Obamacare health insurance bill, congressional lackeys tell us time and again that Tricare for Life is protected. But hey keep shifting those shells. The service organizations have already swallowed the snake oil and are echoing administration claims that TFL is safe. They have already bought into the Shell Game.

We also know everyone in the Democrat Congress is keeping those shells moving and not letting us see that pea. The end result will be another case of “nothing is too good for those who served in uniform”…and that is what they will get. NOTHING!

Response from MOAA’s Legislative team

Much of the specific information in his message is patently untrue. The TFL changes he mentions are not, repeat NOT, in the current health care reform bill.

What he describes was one option in a list of options prepared by the Congressional Budget Office more than a year ago…well before the current administration took office.

That idea didn’t go anywhere – as we predicted it wouldn’t. It never appeared in any legislation anywhere on the Hill, and was never supported by anyone in the Administration or Congress.

Further, we would never say there’s nothing to worry about on military health care. Of course there is. The ongoing budget pressures (which will only get bigger with mounting deficits) will create tremendous pressures in 2010 and beyond to cut all kinds of federal spending. There’s a lot of talk about setting up an entitlements commission to review changes needed to preserve the financial viability of Medicare and Social Security when millions of baby boomers become eligible for those programs in the coming decade.

I believe there will be such a commission, and once it starts reviewing possible Social Security and Medicare changes, it will inevitably lead to review of possible changes for military and federal retirement, military and federal health care, military and federal survivor benefits, VA benefits, etc., etc., just as we saw during the last budget/deficit crunch in the early and mid-90s. We had a huge fight to dodge most of those proposals back then, and it will be a much bigger challenge in light of the much bigger deficits we face now.

But there’s a vast difference between being (a) alert to potential coming threats and (b) claiming that those threats are embodied in current legislation – which they’re not. There are some smoke and mirrors issues in the current legislation – as there is in almost any big bill Congress passes, and there are some things to keep an eye on in the future (such as assumptions that Medicare and its providers will achieve some pretty optimistic “efficiency” goals in the coming years). But most of the changes to Medicare in the current health reform legislation are actually relatively modest and pretty doable ones. The real problem is that those savings will be used to fund health care for the current uninsured rather than to build the Medicare bank to meet the coming expenses of the baby boomers. So when the boomer tide hits, Congress will have to come up with far more significant cuts or tax increases to meet that need, because the relatively easier savings options will have been used up.

So there’s a reason to be worried, but it’s difficult to put much stock in most opinions being passed around the internet about the health care bills, because most start from a highly partisan standpoint, and many just pass on pieces of misinformation that have long since been proven untrue – as in this case.

Unfortunately, once such things get out on the internet, they acquire a life of their own, and well-intentioned people pass them on and help perpetuate the misinformation.

Steve Strobridge
Colonel, USAF (Ret)
Director, Government Relations

Discussion

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Update on Medicare Payment Issue

In the last CBO/TRICARE article, we mentioned the failure of the Medicare Physicians Fairness Act (S. 1776).

That bill would have permanently repealed Medicare’s Sustainable Growth Rate. If the SGR is not repealed or pushed back, Medicare providers would see a 21.5% cut in payments in January, 2010.

We also predicted that it would be placed into another bill by the end of the year to push off the problem until a later date. While we thought the HCR bill would be the most likely candidate, it turns out that the language for the SGR push back was included in the FY2010 Defense Appropriations Act (H.R. 3326), a ‘must pass’ bill that is now awaiting the president’s signature.

A temporary fix was placed in the bill, extending SGR by a period of only 2 months, so the battle is far from over, just delayed as Congress tends to do with these types of fiscal issues.

Last Friday’s Legislative Update provides the details:

Big Medicare/TRICARE Cuts Delayed – For 60 Days
The Senate has been so consumed by the partisan politics of national health reform that other end-of-year crises have had to take a back seat.

In recognition of one urgent issue, the Senate will pause Saturday morning to pass the FY2010 Defense Appropriations Act (H.R. 3326) – a mere 80 days after FY2010 actually started.

Included in that legislation is an emergency measure to delay a 21% cut in Medicare and TRICARE payments to doctors that otherwise would take effect on January 1.

Unfortunately, because Republicans and Democrats can’t agree on funding issues, the new legislation will only delay the Medicare/TRICARE payment cuts until the end of February.

That means two more months of wrangling in hopes that Hill leaders can work out a longer-term doctor payment fix. This is crucial to Medicare and TRICARE beneficiaries, because a 21% payment cut would cause thousands of doctors to stop taking them as patients.

Nobody in Congress wants that to happen. But their continuing squabbles over how to fund a fix – and their continuing games of last-minute budget “chicken” – continue to put millions of beneficiaries at risk.

Meanwhile, the Senate still hasn’t addressed another issue that will affect millions of Medicare-eligible beneficiaries if Congress doesn’t act in the next 13 days.

Under current law, people turning age 65 in 2010 and those with incomes above $85,000 ($170,000 for a married couple) will face steep Part B premium increases (scroll to the middle of the page) as of Jan. 1. Other Medicare-eligibles are protected by a law that bars Part B premium hikes in years when there’s no Social Security COLA. But there’s no such protection for the 25% of beneficiaries who will first become eligible for Medicare next year or who have higher incomes. And those groups will get hit with extra premiums to help make up for the fact that the other 75% won’t be paying more.

The House passed legislation (H.R. 3631) in September to bar Part B premium hikes for all Medicare-eligibles. But the Senate has not acted on it because of an objection by Senator Tom Coburn (R – OK). You can press your senators for action by sending them a MOAA-suggested message.

You Can Help

To help MOAA speak in a loud and clear voice, please take the time to contact congress on these issues:

Stop 21% Medicare/Tricare Payment Cut

Pass the Medicare Premium Fairness Act

Protect Military/VA Beneficiaries Under Health Reform

Discussion

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BotB Verdict

“Myth is, after all, the neverending story.” – Joan Vinge

Such Long Legs This Has

The better to fool people with. What started as an impassioned yet unrealistic review of the Congressional Budget Office’s recommendations to President Obama has continued to gain traction in the email world. Although we’ve already discussed this subject twice in previous articles, some changes have been made in the language of the introduction and the email title, giving it new legs. But this doesn’t change the fact that the CBO report was a recommendation to the administrations that was flatly rejected, TRICARE and TFL funding have made it through the NDAA so far, and the Health Care Reform bill contains no language that would affect military health care.
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