Personal Health Investment Today (PHIT) Act: A good idea?

[jrenaut]

The first time someone yells, “Get off the road, you paid in pre-tax dollars for that bike!” I’m going to punch whoever came up with this bill.

In all seriousness, I am in favor of going in this direction. When we make things that are good for our health relatively cheaper, people consume more of them, and everyone wins. That said, I’m not sure this is the best way to go about doing it. It’s a tax break on luxury items and activities. These items and activities may be beneficial to society as a whole, but it seems that those most in need would see very little benefit. I don’t know the numbers, but if you’re a family near the poverty level, does $2000 in pre-tax spending make any difference at all?

[mstone]

The tax code has enough complicated special interest gimmies for the upper middle class already.

[Anonymous]

@jrenaut 77517 wrote:

I don’t know the numbers, but if you’re a family near the poverty level, does $2000 in pre-tax spending make any difference at all?

If you’re a family near the poverty level, I don’t think it’s all that likely your job offers a “pre-tax medical account” in the first place, is it?

[jrenaut]

@acl 77530 wrote:

If you’re a family near the poverty level, I don’t think it’s all that likely your job offers a “pre-tax medical account” in the first place, is it?

Ahh, right, I must have skimmed over that too quickly. Then I definitely think this is the wrong way to do this. It won’t help the people who really need it at all. And for those it does help (that is, those wealthy enough to put aside money at the beginning of the year for expenses to be incurred later), it won’t make a huge difference. We’ve been moving in the opposite direction, right? Didn’t they recently change the rules on those accounts so a lot of things that used to qualify don’t anymore? I’ve always been annoyed that Ear Planes aren’t covered. They’re the ear plugs you wear on planes that help stabilize the pressure. If I fly without them, I get ear infections. But I can’t use the medical account to buy $8 ear planes. Sure, my insurance covers a doctor visit and antibiotics Rx if I don’t use them. But why not help me save everyone time and money?

Anyway, I like the concept, but not this implementation.

[Greenbelt]

@mstone 77528 wrote:

The tax code has enough complicated special interest gimmies for the upper middle class already.

I don’t think this adds much complexity — it seems to just expand the list of items that can be purchased with a flexible spending account. That list already includes stuff like eyeglasses, etc., not just non-covered medical care.

Maybe progressives could link it to minimum wage or EITC expansions. Here’s your campaign slogan:

“Give the working poor a break and get the middle class off it’s ass!”

[ShawnoftheDread]

@Greenbelt 77533 wrote:

Maybe progressives could link it to minimum wage or EITC expansions. Here’s your campaign slogan:

“Give the working poor a break and get the middle class off it’s ass!”

It’s the “progressives” who narrowed the allowable expenses under existing FSAs, so good luck getting them to expand them now.

[PotomacCyclist]

One counterpoint to the argument that this only benefits the upper-middle class is that significantly reduced healthcare spending by the gov’t. would free up funds for other programs. It could be difficult to confirm that any reduced healthcare spending is related to the PHIT Act (if it passes), because there are other ongoing efforts to reduce such spending. But really, other efforts to control costs that do not address the lifestyle and nutrition problems are minor, compared to what could happen if more people became active and ate better.

Though active lifestyles do not automatically mean that people eat better diets, there does seem to be a strong correlation between the two. Active lifestyles, better nutrition and better health all tend to go together. I think a big reason is that most people, especially adults over 25, discover that junk food diets tend to make it difficult to engage in exercise on a regular basis. I noticed this myself when I first started cycling and triathlon, that the terrible feeling I would get during long runs and long rides had a lot to do with a flawed diet, as well as with inadequate fitness at that point. I’ve also noticed this among many other people. I’ve seen a LOT of inactive people with horrendous dietary practices (mid-afternoon chocolate cake every afternoon, near constant sugary sodas). Many but not all of the active people I’ve met, tend to be a bit more conscious about having a healthy diet, most of the time.

I don’t think the PHIT Act would by itself change the entire culture of sedentary living, but there’s a possibility that it could have a significant effect. Either way, other measures can also help with the health problems in the country, such as moving away from what seems to be large subsidies for commodity crops like corn that tend to be used in junk food, and trying to make vegetables (real vegetables like kale and broccoli, not water-down stuff like iceberg lettuce) more affordable and accessible.

I’ll have to think about the PHIT Act for a while longer. I hadn’t really thought of this idea before, and whether it would help or not. I wonder if they could include bikeshare memberships as a covered category. If so, the Act could help to boost bikeshare membership. As for the Act benefiting primarily middle to upper-middle class taxpayers, even if true, I’m not so sure that’s necessarily bad. Not if it doesn’t harm those in lower economic classes. But I would like to read up more on the topic. Just not today. Maybe once the Winter Olympics are over.

[mstone]

@Greenbelt 77533 wrote:

I don’t think this adds much complexity — it seems to just expand the list of items that can be purchased with a flexible spending account. That list already includes stuff like eyeglasses, etc., not just non-covered medical care.

Maybe progressives could link it to minimum wage or EITC expansions. Here’s your campaign slogan:

“Give the working poor a break and get the middle class off it’s ass!”

Every single carve out in the tax code is “just one little thing that’s not that much”. Altogether, the system is out of control. And with something like this, you know sure as the sun will come up tomorrow that 5 years after implementation there will be hard hitting investigative reporting on people using the tax credit to pay for their tanning booth sessions at the gym and other such fraud. At some point it’s easier to just give people some cash rather than paying for the lobbyists, politicians, accountants, and enforcement to pretend that there’s a legitimate public good in all the piles of paper.

[mstone]

@PotomacCyclist 77536 wrote:

One counterpoint to the argument that this only benefits the upper-middle class is that significantly reduced healthcare spending by the gov’t. would free up funds for other programs. It could be difficult to confirm that any reduced healthcare spending is related to the PHIT Act (if it passes), because there are other ongoing efforts to reduce such spending. But really, other efforts to control costs that do not address the lifestyle and nutrition problems are minor, compared to what could happen if more people became active and ate better.

The history of essentially all of the pre-tax programs is that they are handouts to people in upper tax brackets. (E.g., look at where most of the money in 401k programs goes–people at the bottom of the income spectrum simply don’t have $16k/year of extra money, and no [significantly less valuable to someone in a low bracket than a high bracket] tax benefit is going to change that.) Something like this is extremely unlikely to actually motivate large numbers of people to go to a gym. It is extremely likely that people who already spend a lot of money at gyms will have their accountants write off their gym expenses to rationalize more money for starbucks.

Changing the formulas for commodities subsidies would do far more to change the health picture in this country. It would also impact enough special interests that it’s basically dead on arrival. The only reason that a gym subsidy could possibly pass congress is exactly because it is a middle class handout (not because it could have any affect on health care costs commensurate with the cost of the benefit).

[Terpfan]

Well, I’m in favor of it, but solely for the reason that it will help me save some money. But, from a purely policy perspective, I would say that it’s easier to provide a carve out then it is to ever take one away.

[Author]

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