Health insurance companies are able to deduct each year, for federal
income tax purposes, some of their estimated insurance claim
liabilities, even though they are not fixed in amount.
In
addition, health insurance companies are also able to defer each year,
for federal income tax purposes, the taxability of some of their
unearned premiums received in cash.
In both of the above cases,
these Health Insurance companies are receiving federal tax benefits
that are inconsistent with the general federal income tax principles of
not getting federal income tax deductions until they are fixed, and of
taxing revenues, for federal income tax purposes, when they are received
in cash.
My proposals here are to allow all Big Health Insurance
Corps to deduct insurance claims only in the year when they are fixed,
and to recognize premium revenues in the year when they are received in
cash.
I would not apply my above proposal to smaller Health Insurance companies.
The
economic damage to the US Big Health Insurance Corps from this proposal
is substantially softened here due to this corporate tax loophole
closer being treated as a Temporary Tax Difference under US generally
accepted accounting principles. The total federal income tax deductions
and revenues from these insurance claims and premiums will be the same
over the long run. Thus, there will be no income tax charge to the
income statements of these Big Health Insurance Corps from my proposals
here.
There should be significantly positive CBO scoring to the
US Government from these proposals, for the next 10 years and for many
years thereafter.
I would also consider applying the above proposals to all large Insurance Corps, including giants like AIG and MetLife. There are so many of these large Insurance Corps, thus the positive CBO scoring to the US Government will be very substantial, for the next ten years and for many years thereafter.
