STOP health care
In the name of reducing the federal deficit, leaders from both political parties have suggested shrinking or eliminating healthcare tax breaks.
Should the tax breaks get cut or eliminated, the obvious result would be that fewer employers would offer health insurance – a prospect that would’ve sparked more controversy before health reform was passed. Do you think eliminating or reducing the tax break – in combination with other changes in tax law – would be a viable way to curb the nation’s deficit problems?
And the thinking is eliminating those tax breaks would make Americans smarter healthcare consumers – because they’d be paying more for their medical and wellness decisions, according to a recent report by the Associated Press.The other reason to repeal the tax break: Economists predict it would raise hundreds of billions of dollars and lessen worries that increased government debt will drag the economy down. Won’t happen overnight. Chances are a repeal of the tax breaks won’t happen anytime soon, but it’s something that’s being considered long term. .
A report from Obama’s deficit commission recommended a gradual phase out of the federal tax break for job-based health plans, as well as other sweeping changes – like setting an overall budget for federal programs like Medicare and Medicaid.
The idea isn’t to just raise revenue, economists say, but finally to turn Americans into frugal health care consumers by having them face the full costs of their medical decisions. Such a re-engineering was rejected by Democrats only a few months ago, at the height of the health care overhaul debate. But Washington has changed, with Republicans back in power and widespread fears that the burden of government debt may drag down the economy.
“There is no short-term prospect of enactment,” former Senate Majority Leader Tom Daschle, a leading Democratic adviser on health care. “However, in a tax reform (and) deficit reducing context in the long term, the prospects are much better,” said Daschle. He opposes repealing the tax break by itself, but says he would be “willing to look” at it with other changes that improve access to quality health care while reducing costss.
Repealing the tax break would raise several hundred billion dollars a year, depending on how it’s done. Many economists believe employers would boost pay if they didn’t provide health care. Proponents of repeal usually call for a tax credit to offset part of the cost of individually purchasing coverage..
“The problem of rising debt is so serious that Republicans and Democrats are going to have go back and look at almost everything to see how we solve this,” said Rivlin. Simpson calls the health care tax break a “tax earmark.” He said that “you cannot get anything done in this game unless you deal with every single aspect of the federal budget, and the biggest thing to wrap our arms around is health care.”.
In a twist, the health care law eventually may make it easier to pry people away from employer insurance, a system that dates to World War II and has sustained three generations. Starting in 2014, new insurance markets will make it easier for people to buy coverage on their own. These state-based “exchanges” would work like the federal employee health plan. Taxpayer subsidies will help individuals and families with low to moderate incomes pay premiums..
One Democratic member of Obama’s deficit commission is wrestling with the idea. California Rep. Xavier Becerra says it’s a very different situation from the health care debate. Back then, policymakers were looking for money to pay for covering the uninsured. Now, they’re looking at rebalancing the role of government in the economy. He’s not considering health care tax breaks in isolation. “What we are saying is that we are going to examine every tax earmark,” Becerra said. “They are all on the table. If you want to keep one, then show us how you are going to come up with the money. That’s where you really have to put your money where your mouth is.”.”
Do you think eliminating or reducing the tax break – in combination with other changes in tax law – would be a viable way to curb the nation’s deficit problems? This write will keep you posted
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