Friday, July 30, 2004
Putting a cap on high-end insurance policy subsidies
[John O. Fox, "The Tax Break That Corporate Execs Don't Need," The Washington Post, 25 July 2004.]
Mount Holyoke College lecturer John Fox details in this article just how absurd current tax policy is regarding federal tax exemptions for health care coverage. He takes up an idea proposed under Ronald Reagan's Treasury Department to cap the exemptions. Building upon this idea, policymakers should consider decoupling the exemption from employer-based insurance altogether:
Helping uninsured Americans acquire basic health coverage is an important presidential campaign issue. Not only are there an estimated 43 million uninsured, but premiums for those who do have insurance are rising at double-digit rates, employers are shifting an increasing share of the costs onto employees, and many people who used to work for companies that paid part of their insurance are now self-employed and have to foot the whole bill themselves. So both President Bush and Sen. John Kerry are promising to make coverage more affordable for the uninsured. But I bet you're wondering just where Congress is going to find the money to make this possible. Without the money, the candidates' promises are, let's face it, empty.
Bush proposes to spend $90 billion over the next 10 years to extend coverage to about 5 percent of the uninsured, but he has yet to tell us where the funds will come from. Kerry proposes to spend at least $650 billion over the same period to help about 60 percent of the uninsured, and expects to pay for it by rolling back the Bush tax breaks for the top 2 percent of taxpayers, an unlikely event if the Republicans retain control of Congress.
So let's get real. Want to know how to cover all of Bush's plan or make a significant down payment on Kerry's? Here's how: Congress could eliminate a tax break that for the last 50 years has irresponsibly subsidized deluxe health insurance policies, mostly for corporate management.
If tax relief for health insurance were limited to basic policies, the additional income tax revenues -- $15 billion in 2004 alone, according to a 2001 Congressional Budget Office estimate -- could go a long way toward covering the uninsured. Moreover, tax breaks for deluxe policies excessively drive up the cost of health insurance, and health care, for everyone. So curtailing this tax break is a winner for the great majority of Americans.
[John O. Fox, "The Tax Break That Corporate Execs Don't Need," The Washington Post, 25 July 2004.]
Mount Holyoke College lecturer John Fox details in this article just how absurd current tax policy is regarding federal tax exemptions for health care coverage. He takes up an idea proposed under Ronald Reagan's Treasury Department to cap the exemptions. Building upon this idea, policymakers should consider decoupling the exemption from employer-based insurance altogether:
Helping uninsured Americans acquire basic health coverage is an important presidential campaign issue. Not only are there an estimated 43 million uninsured, but premiums for those who do have insurance are rising at double-digit rates, employers are shifting an increasing share of the costs onto employees, and many people who used to work for companies that paid part of their insurance are now self-employed and have to foot the whole bill themselves. So both President Bush and Sen. John Kerry are promising to make coverage more affordable for the uninsured. But I bet you're wondering just where Congress is going to find the money to make this possible. Without the money, the candidates' promises are, let's face it, empty.
Bush proposes to spend $90 billion over the next 10 years to extend coverage to about 5 percent of the uninsured, but he has yet to tell us where the funds will come from. Kerry proposes to spend at least $650 billion over the same period to help about 60 percent of the uninsured, and expects to pay for it by rolling back the Bush tax breaks for the top 2 percent of taxpayers, an unlikely event if the Republicans retain control of Congress.
So let's get real. Want to know how to cover all of Bush's plan or make a significant down payment on Kerry's? Here's how: Congress could eliminate a tax break that for the last 50 years has irresponsibly subsidized deluxe health insurance policies, mostly for corporate management.
If tax relief for health insurance were limited to basic policies, the additional income tax revenues -- $15 billion in 2004 alone, according to a 2001 Congressional Budget Office estimate -- could go a long way toward covering the uninsured. Moreover, tax breaks for deluxe policies excessively drive up the cost of health insurance, and health care, for everyone. So curtailing this tax break is a winner for the great majority of Americans.
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