Taxing health benefits?

The NY Times has a story about the Obama team considering some kind of tax on health benefits.

 The Obama administration is signaling to Congress that the president could support taxing some employee health benefits, as several influential lawmakers and many economists favor, to help pay for overhauling the health care system.

The proposal is politically problematic for President Obama, however, since it is similar to one he denounced in the presidential campaign as “the largest middle-class tax increase in history.” Most Americans with insurance get it from their employers, and taxing workers for the benefit is opposed by union leaders and some businesses.

 The reliable, D.C.-based Alliance for Health Reform tells you all about taxes and health insurance in this primer:

The United States tax system subsidizes the purchase of employer-sponsored health insurance for more than 160 million non-elderly people at a “cost” of approximately $200 billion a year. This tax subsidy is a major reason why most Americans have health insurance coverage through either their own employer or that of a family member. In recent months, the tax treatment of health insurance has gained a lot of attention – both during the presidential campaign and in health reform debates in Congress.

What is the current tax treatment of employer-sponsored health insurance? How does the tax treatment of health insurance impact employers? How does it impact employees? Do some workers benefit more than others from the current tax subsidies? Does altering the tax treatment of health insurance have the potential to expand or diminish coverage? Will cost containment efforts lead policy makers to consider altering the tax treatment of health insurance?

In addition to David Blumenthal of the MGH/Partners Institute for Health Policy, the group  takes note of the following local experts:

Two from Harvard

David Cutler

Professor Cutler served on the Council of Economic Advisers and the National Economic Council during the Clinton Administration and has advised the Presidential campaigns of Bill Bradley, John Kerry, and Barack Obama. Among other affiliations, Professor Cutler has held positions with the National Institutes of Health and the National Academy of Sciences. Currently, Professor Cutler is a Research Associate at the National Bureau of Economic Research and a member of the Institute of Medicine. NYTimes story featuring DC

Katherine Baicker, PhD

Professor of Health Economics in the Department of Health Policy and Management at the Harvard School of Public Health.  She is a research associate at the National Bureau of Economic Research. 

MIT

Jonathan Gruber, Massachusetts Institute of Technology.

Dr. Gruber’s research focuses on the areas of public finance and health economics.

 

 

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