Affordable for Individuals Versus Affordable for Wal-Mart Employees

Here’s a scary part of MaxTax, if I understand it correctly. MaxTax still screws employees but rewards Wal-Mart as I’ve laid out in this post and this post. Here’s the language in question:

As a general matter, if an employee is offered employer-provided health insurance coverage, the individual would be ineligible for a low income premium tax credit for health insurance purchased through a state exchange. An employee who is offered coverage that does not have an actuarial value of at least 65 percent or who is offered unaffordable coverage by their employer, however, can be eligible for the tax credit. Unaffordable is defined as 13 percent of the employee‘s income. For purposes of determining if coverage is unaffordable, salary reduction contributions would be treated as payments by the employer. The employee would seek an affordability waiver from the state exchange and would have to demonstrate family income and the premium of the lowest cost employer option offered to them. Employees would then present the waiver to the employer. The employer assessment would apply for any employee(s) receiving an affordability waiver. Within five years of implementation, the Secretary must conduct a study to determine if the definition of affordable could be lowered without significantly increasing costs or decreasing employer coverage.

A Medicaid-eligible individual can always choose to leave the employer‘s coverage and enroll in Medicaid. In this circumstance, the employer is not required to pay a fee.

But note how affordability is defined: 13% of "income."

Now look at how MaxTax defines "affordable" for individuals having to buy insurance via an exchange.

Exemptions from the excise tax will be made for individuals where the full premium of the lowest cost option available to them (net of subsidies and employer contribution, if any) exceeds ten percent of their AGI.

The individual definition of affordable uses 10% of Adjusted Gross Income. Whereas the employer’s definition of affordable uses 13% of (apparently) total income.

Now, it’s a good thing (sort of) that the affordability rate for individuals is 10% of AGI. That means a family would be able to opt out if there were no health care available at even a lower rate than I thought (for example, it might mean a middle class family could opt out if health insurance cost them $6,000 a year, as opposed to $8,000 a year). It’s a bad thing, though, because it means MaxTax would be far from universal–a lot of middle class families will pretty much have to opt out because they can’t afford coverage. 

But if your employer offers health care–even if it covers just 65% of costs–then you can’t opt-out unless you’re paying out of pocket 13% of your total income!! Oh, and to opt-out you have to go to your manager and tell him or her that you’re opting out, which means the employer will be fined; how many people do you think will be fired rather than opt-out?

I hope I’m wrong about this. But if I’m understanding this correctly, it reinforces my impression that MaxTax is an invitation to allow employers to turn their employees into captive profit centers.

58 replies
  1. Leen says:

    Looking through the report. Think Wendell Potter summarized the bill by calling any bill that did not include the public option a “Insurance Industry Profit Protections and Enhancement Act”

    Wonder if Wendell would visit FDL for a Salon?

  2. zak822 says:

    I found myself wondering how “affordable” either percentage actually is for the middle class.

    Economists used to advise people that housing (as rent or mortgage)should be no more than 30% of your income, food should be so much, savings should be 10% and so on.

    I’m wondering what percentage of my take home pay should be allocated for health care insurance. With everyone making payments on a lot more items than our parents did, like school loans and car payments, is either 10% or 13% a reasonable number? Or even a makable number?

    • emptywheel says:

      No, neither is affordable, as I’ve pointed out repeatedly. Because it’s not just 13%. It’s 13% plus the $11,900 in out-of-pocket that insurance companies can charge. So this literally will place middle class families in the position of having to choose between their mandated insurance costs and paying off other debt.

        • Gnome de Plume says:

          LOL. Not. I am wondering which planet these people are from. They have obviously not visited the current situation many of us are in. Are they going to revisit the bankruptcy laws again and put in a clause that says we cannot jettison our health care debt each time we have to declare bankruptcy? For the chronically ill the bills never end. Bankruptcy will beome a biannual event.

          • pseudonymousinnc says:

            I am wondering which planet these people are from. They have obviously not visited the current situation many of us are in.

            They are from a planet named “grab as much as you can before the racket ends”. In a decade, if there are any private health insurance CEOs still around in the US, they’ll need a larger security detail than the president, because people will want them strung up from the nearest lamp-post.

          • KitsapRiver says:

            Not bankruptcy.

            Death panels at many American kitchen tables. Private death panels consisting of one family with a chronically ill adult member. Or even more private death panels consisting of that chronically ill individual alone.

            We have already, many of us who are ill, been talking about this amongst ourselves. Many of us know what we will need to do rather than putting our families through financial hell. Many of us have already planned our exits.

            I’ve got a rather easier time than many in doing it. All I have to do is stop dialysis and go on hospice and die. We even have a death with dignity law in this state now and I can take advantage of it. I don’t have to go out in the woods with a pistol like many will, or hoard pain medication.

            When it’s either that or lose everything including our home, guess what I will choose. 50 isn’t very old. But maybe it’s old enough. Maybe, if the Max Tax passes, it will have to be.

            • Gnome de Plume says:

              This talk should be going on in public at a very loud volume, not quietly around kitchen tables.

              I am glad that the Baucus bill is so bad, beause it should be an eye opener for the other senators. Especially after the Left gets through tearing it up like we are doing now. This isn’t the end of HCR. The finance committee gets to figure out how to pay for it, but this is only the first round. The anger at the bill’s absurdity, the urgency that becomes more apparent as more stories get told, may just push a few others on the whole committee to grow spines and figure out that the Rethugs will do nothing to help and therefore they and their allies at Faux News can and should be ignored. This is important stuff and now is not the time to write it all off just because six goof balls with no final say wrote the best “save insurance profits” bill they could write. We got lots of sausage making to slog through yet.

              P.S. I can’t believe I am saying this. I am usually as pessimistic as the next guy.

              • tbsa says:

                What cracks me up is how Baucus gave away the store for the republic writing this bill and not even one of them supported it anyway. What does it take for the dems to get the hint. Republics just want to kill the bill to hurt Obama, they don’t care about anything else including helping Americans by reforming healthcare.

  3. earlofhuntingdon says:

    This all seems an elaborate ruse to make health care reform impossible. There’s no “splitting the baby” here, except in a literal sense. There’s no wise middle ground. No rhetorical twisting of arms and pocketbooks would make any of this plan acceptable to anyone but an insurester, because it fails to improve health insurance practices or health care costs.

    Adopting Baucus’ plan would be a boon to the Republicans, and be a generational albatross on the shoulders of a splintered, wasting, tubercular Democratic Party. It’s the sort of “Democratic” plan that Karl Rove would promulgate.

    Assuming all of that is obvious to Blue Dog ‘Bama, what’s its utility to him? As an IED to destroy credible reform or a Green Wall to protect insuresters from them. It is too prominent to function as a way to let little Sammy play and exhaust himself so that he’s unready when the grown-ups sit down to negotiate a real plan. (A process that Obama seems already to have completed with insuresters and without the public.) This plan seems more like a snowball pushed down hill by Republicans, aimed at the process of credible reform.

    • darclay says:

      Spot on!

      The democrats seem under the leadership of the mighty Harry Reid and Nancy; who knows what she is up to, unable to get anything done what a bunch of losers we ended up with.

    • andreams says:

      Oh, it’s reform alright. Glorious benefits at a very reasonable cost – for the insurance companies. All those campaign contributions and lobbying efforts really paid off.

      I guess I’ll be one of those opting out because using Max’s 5:1 ratio, the premium on my current plan can increase to $1,885. per month.I’m 60 and older Americans are getting royally shafted. For some stupid reason, I was really expecting something good to come out of all this. Stupid me.

      I’ve had insurance all my life and now, due to this wonderful reform, I’ll have to drop it. In all honesty, I feel like this one man has written my death sentence.

    • emptywheel says:

      As I understand it (and I don’t promise I do understand it), the 13% is just the employee out of pocket. So Wal-Mart can’t ask its employees to pay more than 13% of their chicken feed to buy into a Wal-Mart plan. BUt that means Wal-Mart can ask employees to pay 90% of the cost, and they pick up the 10% themselves.

      The 13% becomes a problem bc then Wal-Mart’s employees can drop out and enroll in a private program with subsidies from the govt. But as I suggest, the chances are at least significant that as soon as an employee goes their Wal-Mart boss and says, “You’re taking too much out of my paycheck for health care, I want a waiver,” Wal-Mart will promptly fire the person, rather than get fined up to $3000 for not providing “affordable” health care.

      • darclay says:

        I guess i’m asking (in my case) I am a corp. single employee me and I’m paying by the time I pay out of pocket almost 12,000. a year. You, if you are self insured know what I mean what happens to us? would be be eligable for assistance or are we in-eligable ? Seems like I’m blonder than usual today ,lol.

        • emptywheel says:

          It depends on income. If I read it right, it would count you as a single person, not a corporation (the rules on employee based coverage kick in at 50 employees). So if you make less than 400% of poverty level, you get nothing, and also can be asked to pay more than 13% of your income in premiums. Of course, if there is no option available to you for less than 10% of your income, then you can opt out.

          But then you still won’t have insurance.

          The one upside for you is that the bill caps out of pockets (after premiums) at $11,900 (this will change over time). So once you have insurance you can only pay so much.

      • cinnamonape says:

        Let’s use your scenario. Say the employee makes $30K. Walmart could create a plan costing $3900, requiring the employee to pay $3500 of it, chipping in a measly $400. But the Insurance company can also require the worker to pay up to an additional $11,900?

        If so that’s half the paycheck. I’d think the person would WANT to get fired. The only people who wouldn’t would be illegal aliens getting paid via the back door…and because there’s no apparent need to include them in the record keeping this could be a boon to companies like Walmart to keep people “off the books”.

      • bmaz says:

        Why do you call this the “Bush Toady supreme Court”? Bush had only marginal overall effect on the court, save for ensuring that two conservative seats are protected for longer periods. He replaced Rehnquist with Roberts, that is no net change. He replaced O’Connor with Alito, a small shift to the right, but certainly not huge. The Supremes are certainly far too conservative in bent, but they are not necessarily Bush Toadies so much as they are big business and police state toadies, but they were that already before Bush.

  4. maryo2 says:

    OT – Sens. Brownback and Roberts have been blocking nine nominees for senior administration posts at the Pentagon as well as John McHugh for Secretary of the Army.

    Today The Hill reports “Both of Kansas’s senators Wednesday dropped holds on [McHugh and] several of President Barack Obama’s nominees.”

    I can’t find who the several are or if several = all nine.

  5. fatster says:

    Surprise! Surprise!

    Health Insurance Stocks Rally With Release Of Baucus Health Bill
    . . .
    “Following Baucus’ announcement, HealthNet shares increased by 3%, United Health Group Inc shares rose by 2.7%, Humana Inc. grew by 2.6%, Wellpoint stock gained 1.7% and Aetna Inc rose 1.6%:”

    More, with nice graphic.

    • nick1936 says:

      Look this Ass stuffed his pockets wit over $3 million in the past 3 years so dump this bill and baucus in the trash can.

  6. Hmmm says:

    Excellent plumbing of the craptastic depths of this utterly shameless piece o’ work.

    Here’s my question: From all coverage/commentary today, it appears the MaxTax has no backing at all. If it’s not going to be passed in the Senate, how seriously does it need to be taken, really? I guess that means: Can bad parts of this bad bill leak into conference (or, more likely, the reconciliation process)? I am assuming another, different bill with more backing is going to come along sooner or later and pass the Senate, and that will be the Senate’s primary input to conference/reconciliation.

    • andreams says:

      Did you see him at his press conference. He looked and sounded so very proud of this monstrosity and kept saying how it changes healthcare. It changes it alright. I will now be without.

  7. Rayne says:

    By the way, you might want to look at who’s getting Wal-Mart PAC money.

    Don’t forget to look at money given this past election cycle, too, since it may have been spent on candidates who are influencing the discussion today.

    Like Max Baucus, who hasn’t received money from Wal-Mart yet that I can tell this year, but received $7K last cycle.

    • klynn says:

      Never forget that a major portion of the stimulus package was electronic advancements in health care records technology with Walmart getting a windfall.

      So, perhaps the MaxTax bill has a great deal of Walmart lobby efforts behind it.

      Wal-Mart’s move comes as the Obama administration is trying to jump-start the adoption of digital medical records with $19 billion of incentives in the economic stimulus package.

      The company plans to team its Sam’s Club division with Dell for computers and eClinicalWorks, a fast-growing private company, for software. Wal-Mart says its package deal of hardware, software, installation, maintenance and training will make the technology more accessible and affordable, undercutting rival health information technology suppliers by as much as half.

      “We’re a high-volume, low-cost company,” said Marcus Osborne, senior director for health care business development at Wal-Mart. “And I would argue that mentality is sorely lacking in the health care industry.”

      LKN2 @ 25 – I think Walmart is there now. I think we are past “probably”.

  8. LKN2 says:

    Note the phrase “Salary reduction contributions would be treated as payments by the EMPLOYER.” Salary reduction comes out of the EMPLOYEE’S wage!

    If this monstrosity passes, Walmart will probably go into the health insurance business – there will be so much profit in it and they can manipulate the system with their huge employee base.

  9. rwcole says:

    There seems to be some confusion as to just what is limited to 13% of income. Is it health care premiums or is it the maximum out of pocket expenditure that few will ever experience for even one year. Makes a difference I guess.

    • emptywheel says:

      It is the premium. Which, because it’s related to subsidies, must provide at least 73% of costs.

      On top of that 13%, you might still have to pay $11900 in out of pocket costs.

  10. Sufilizard says:

    As I understand it there have been five committees who have passed bills, why does it seem to be the consensus of the MSM that nothing matters but this crappy Baucus bill?

    • pseudonymousinnc says:

      Baucus got the last word. So it becomes the primary draft, and every other bill is either a “revision” or, to the braindead media, “watering down” the Baucus draft.

      Time for Pelosi to assert the status of the House and make clear that HR3200 isn’t subordinate to the MaxTaxHax.

  11. Phylter says:

    Two new names to refer to Baucus, Max Bought-us, or Max Bupkiss.
    Either way, he’s got nothing, except graft and lies.

  12. klynn says:

    So perhaps Walmart will get into the insurance business and offer their own kind of health care and coverage:

    The company’s test bed for the technology it will soon offer physicians has been its own health care clinics, staffed by third-party physicians and nurses. Started in September 2006, 30 such clinics are now in stores in eight states. The clinics use the technology Wal-Mart will offer to physicians.

    Wow! Walmart healthcare…

  13. tbsa says:

    So for those folks who are near 30% of their income in mortgage payment taking a 13% hit in insurance would be impossible.

    We should make congress take a 40% decrease in pay and see what they would think about that.

    • Sufilizard says:

      We should make congress take a 40% decrease in pay and see what they would think about that.

      Forty percent of their congressional salaries probably wouldn’t phase most of these crooks. Now if you take away 40 percent of the income they get from kickbacks and bribes, you may hit them where it hurts.

  14. wocolor says:

    Sorry to go off topic, but i was horrified today watching so many senators on C-Span vote for a Vitter amendment that forces residents of low-income housing to do eight hours of community service a month. It was such a classic example of easy hate and projection onto poor people but the wealthy in this country. I noticed a lot of white democratic senators, such as McCaskill and Nelson of Florida voting for it. They won’t do anything to the banks to force them to allow people stay in their homes, but this is easy.

    • Hmmm says:

      If enacted, that should give rise to a challenge lawsuit, and right quick too. Sounds like a taking to my unlawerly ears, but probably lots of other bases on which to challenge it. Unfortunate that extreme illogic per se is not a basis for a legal challenge — “There exists a class of people able to demonstrate such financial need that housing subsidies are made available to them; we observe that members of this class are largely paid by the hour; now therefore, let us undertake to pile an additional unpaid time burden on that same class of people.” Way to write ‘em, Diaper Dave.

  15. orionATL says:


    the baucus bill is a health industry effort to sabotage public, e.g.,government, involvement in the “reform” of in health care costs for generations.

    that’s all it is,

    a sabotage job.

    earl of huntington @7 comes close to this when he observes:

    “… This all seems an elaborate ruse to make health care reform impossible. There’s no “splitting the baby” here, except in a literal sense. There’s no wise middle ground. No rhetorical twisting of arms and pocketbooks would make any of this plan acceptable to anyone but an insurester, because it fails to improve health insurance practices or health care costs.

    Adopting Baucus’ plan would be a boon to the Republicans, and be a generational albatross on the shoulders of a splintered, wasting, tubercular Democratic Party. It’s the sort of “Democratic” plan that Karl Rove would promulgate..”


    the baucus/health industry lobbyists plan it is not just intended to make public involvement in reform unworkable now, in the present,

    it is designed to make it impossible to propose public involvement in the future due to the deliberately punitive and obscure nature of tax “penalty” provisions.

    the baucus plan is designed to make public involvement in health care cost containment anathema for GENERATIONS.

    isn’t corporate involvement in public policy wonderful. think how much better it will be once republican operative, and supreme court justice, john roberts, persuades the other four bishops to lift all limits on corporate influence in american politics.

    thanks, ew, and commenters, for revealing this scheme in detail.

    • Hmmm says:

      Welp, having thought for a few hours now, the Baucus bill seem so far off the mark of anything that could ever have been actually expected to pass, that I don’t see how it can be intended as anything other than a stake in the ground, a pole, an extreme position marking one end of the spectrum. 676/SP would I guess be the other pole. So next comes a fight to see where on the continuum in between the two sides will find equilibrium and a bill.

      So it ain’t over yet, not by a long shot.

  16. orionATL says:

    hmmm @54

    yours is a thoughtful comment and i suspect accurate for the nonce.

    it would be reasonable to suppose that this is the beginning position in a negotiation.

    but what ew and her commenters have highlighted is just how treacherous this, for lack of a better word, “tax” (or “individual costs” stuff) is.

    i’m not being reasonable here; i’m being speculative; i’m being skeptical.

    what a great route to sabotage “tax/costing” would be if one were so inclined –

    political dynamite, not just “now” but forevermore.

    would the health industry have any incentive to pursue such a tactic?

    would our corporate-funded united states senate have the leadership and concern for the public good that would them handle to defuse this dynamite?

    it’s possible.

    but when was the last time the U.S. senate operated in such a fashion?

  17. wikwox says:

    If you think the Founding Fathers were infallible take a look at the Senate. Clowns and fools like Max Baucus run rampant and we’re dumb enough to pay attention.

  18. tjallen says:

    The obvious problem is people like me. I am self employed, uninsured, and currently am spending at or over 100% of my income every year now. Where in the h am I supposed to find another 13% ?????? As someone above said, this is unenforceable because there is no more of my income to be had! It doesn’t exist! Maybe when business is good, I could pay, but when business is slow, like now, I’m under water now and there is no 13% available. I already ration my healthcare. Now someone will be arriving at my door to steal 13% more??

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