No more good insurance plans for you, says Congress. Tax on Health-Care Benefits Is Among Senate Options
In a document laying out health-care alternatives, Chairman Max Baucus, a Montana Democrat, and Senator Charles Grassley of Iowa, the panel’s top Republican, said taxing health benefits would address so-called “Cadillac plans” they said promote overuse of health-care services and boost the cost of care. The two senators also proposed scouring Medicare and other aspects of the U.S. health-care system for cost savings.
They want to create an insurance shopping mall:
Democrats also are eyeing creation of a “health exchange” where employees of small firms and the uninsured could shop for insurance among several plans at different prices.
To help pay the cost, the Senate panel is considering a number of tax changes, including a new levy on health-insurance benefits.
Employer-provided health insurance is currently not counted as income for tax purposes. The Senate committee is considering capping the tax exclusion based on the value of an insurance policy or the employee’s income level. Another option is to end the exclusion and offer a tax deduction or credit instead.
How does taxing insurance benefits make healthcare cheaper? It doesn’t:
“That just makes health care more expensive for Americans when the key point of health-care reform is to make health care more affordable,” said Richard Kirsch, national campaign manager for Health Care for America Now, a Washington coalition of organizations that seeks affordable health care for all.
Where else are they looking for the money to finance this? Besides a tax on sugared drinks,
Other possible tax increases include an extension of the Medicare payroll tax to all state and local government employees, and new limits on — or outright repeal of — the flexible spending accounts that allow individuals and their employers to set aside tax-free income to pay for some out-of- pocket medical expenses.
The Senate committee is also looking to boost government revenue by curbing the 25 percent tax deduction for claims and some other expenses now allowed to Blue Cross-Blue Shield health plans. The committee could cut the deduction to 10 percent or end it altogether, Baucus and Grassley said.
I do like the idea of state and local government employees paying Medicare tax. That should be extended to Federal employees, too. And Congress.
What’s the President’s position? What I’ve come to expect from the Great Leader: White House Again Leaves Door Open to Taxing Health Benefits