By Ezra
I keep forgetting to mention this, but I'm really conflicted on the President's Tax Advisory Commission's recommendation to shut down the health insurance deduction:
In the case of employer-paid health insurance, the main proposal the panel discussed would limit tax-free premium payments to the average cost of the premium the government pays for federal workers. That is now about $11,000 a year for family coverage.
Under the current law, employers can deduct every penny they pay for health insurance for their workers, and the workers are not taxed on this benefit. The panel did not agree on whether the employers or employees would be taxed if a ceiling were imposed, but as a practical matter, there would probably be no difference.
It is, of course, obviously bad politics, so I'd be shocked to ever see it implemented. But on a policy level, things get a bit trickier. Our fractured, uneven health system largely owes its employer-based structure to a WWI-era tax quirk that allowed companies to shelter their wartime profits from massive taxation if they plowed them into employee benefits like health care. Thus, corporations took that route, unions concentrated on employers rather than the government, and our current mess continued to crystallize. But take away the tax shelter and you kick the legs out from under our entire structure. Think business doesn't like paying for health care now? Wait till they get taxed on it. Think voters are howling over premiums now. Wait till they start pushing them into higher marginal brackets.
The point of all this, of course, is that Americans expect health care. Currently, 85% have it, so the inclination is to retain the status quo., But if you start breaking down the employer system, ensuring that more and more Americans will lack care and and more and more businesses will be crushed under their benefit packages, the calls for single-payer will evolve from isolated utterances to a thousand bullhorns. Indeed, I can't really think of a quicker way to push us there.
