One piece of the health-care reform package taking form in the U.S. Senate is a plan to end some of the favorable tax treatment for employer-provided health insurance, perhaps by subjecting benefits above some threshold to the federal income tax.
For a couple of decades, the free-market community has called for easing or eliminating this distortion in tax policy, which shields consumers from the true cost of health care and discourages patients from shopping around for less-expensive treatments.
It was also a centerpiece of Sen. John McCain’s health-care reforms, for which he was demonized by the Obama campaign and other Democrats:
Said candidate Obama in September 2008:
I can make a firm pledge: under my plan, no family making less than $250,000 will see their taxes increase ? not your income taxes, not your payroll taxes, not your capital gains taxes, not any of your taxes. My opponent can’t make that pledge, and here’s why: for the first time in American history, he wants to tax your health benefits Apparently, Senator McCain doesn’t think it’s enough that your health premiums have doubled, he thinks you should have to pay taxes on them too. That’s a $3.6 trillion tax increase on middle class families. That will eventually leave tens of millions of you paying higher taxes. That’s his idea of change.
Good to see the president (or at least key Democrats in Congress) may be open to this sensible idea now that he’s in office.
In March, Dr. C.L. Gray, founder of Physicians for Reform, outlined this and other consumer-friendly changes for health-care policy in this CJTV video:
