Debt Panel Urged To Maintain Tax Exemption for Job-Based Coverage
A bipartisan group of 160 House lawmakers in a recent letter asked that the debt panel reject any proposals to limit or eliminate the tax exemption for employer-sponsored health care benefits, The Hill's "Healthwatch" reports.
The group, led by Reps. Joe Courtney (D-Conn.) and Tom Cole (R-Okla.), argues that such proposals would amount to a tax on middle-income U.S. residents that would threaten coverage for nearly 160 million individuals and increase long-term federal spending.
Some health policy experts have advocated for a tax on employer-sponsored health care benefits as a way of reducing health care costs by creating a disincentive for overusing medical services.
A pair of previous debt reduction proposals -- one by former Sen. Alan Simpson (R-Wyo.) and former White House Chief of Staff Erskine Bowles, and another by Alice Rivlin, founding director of the Congressional Budget Office, and former Senate Budget Chair Pete Domenici (R-N.M.) -- included plans to cap and then phase out tax exemptions on employer-sponsored benefits (Pecquet, "Healthwatch," The Hill, 11/4).
In addition, a similar plan was considered and rejected during the crafting of the federal health reform law.
In the letter, House lawmakers wrote that a tax would cause employers to limit or eliminate coverage, forcing more workers to purchase individual coverage through the state-based exchanges created by the overhaul or rely on Medicaid. The lawmakers wrote that as a result spending in the exchanges would "explode," which would "far outweigh federal revenue gained" from the tax.
Further, the letter stated that eliminating the tax exemption for employer-sponsored health benefits would decrease the insurance savings that employers have been able to gain through lower administrative costs and use of health management plans (Ethridge, CQ HealthBeat, 11/4).
The letter stated, "There are some academics who believe that this is a good way to change the system," but those experts are "not focusing on how this tax would actually be implemented and how premiums are actually calculated" ("Healthwatch," The Hill, 11/4).
Courtney noted that the American Academy of Actuaries has found that the factors that most affect health care premiums are age and region, not overuse of services. Reducing or eliminating the tax exclusion would disproportionately affect elderly workers, women and small-business employees, particularly those in high-cost regions or high-risk fields, Courtney said (CQ HealthBeat, 11/4).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.