There are at least two sacred cows in the health care debate. One of them may be the target of those looking to finance a trillion dollar reform plan.
Untouchable is the notion that patients can select their own doctors, at least within a range of choice.
On the radar, though, is the tax exclusion of employer-sponsored health insurance.
The Urban Institute writes in, Changes to the Tax Exclusion of Employer-Sponsored Health Insurance Premiums: A Potential Source of Financing for Health Reform – “Many have suggested that reducing or eliminating the tax exclusion of employer-sponsored health insurance (ESI) could generate significant additional tax revenue to fund expansions in health insurance coverage,” write the authors of a recent paper that explores “revenue and distributional consequences of several policy options that would alter the ESI tax exclusion. The paper examines the “a cap, or dollar limit, on the amount of employer-sponsored health insurance premiums excluded from taxable income” as well as “an index that determines how this cap might grow over time.” The authors conclude, “in addition to providing a source of funding for health reform and incentives for seeking less expensive coverage, limiting the tax exclusion would mitigate the huge inequities built into the current treatment of employer contributions to premiums”
To be clear, the impact would be an effective tax increase for most workers covered by group insurance. Some or all of the premium would be taxable.
That would be a shock to many at a time when wages are already flatlined or declining. It also would put those workers on a par with those who buy individual medical policies, where after-tax dollars are used.
Is this fair or is this folly? The political risk appears significant. But, at a time when funding for ambitious healthcare plans is scarce, it also is a sizeable pot sure to catch the eye of policymakers.
To review the Urban Institute paper, go to: www.urban.org/url.cfm?ID=411916
