Congress has begun to focus in on reforms for the nation's health care tax policy -- a move that could impact hundreds of billions of dollars a year in cherished tax breaks for individuals and employers.
That worm can spilled open on Capitol Hill as the Senate Finance Committee recently launched hearings into the single largest tax expenditure in the tax code -- the $200 billion a year in income and payroll tax incentives paid to encourage employers to offer health insurance coverage to their workers.
With 45 million Americans now without any health insurance, and health costs continuing to rise at three times the overall rate of inflation, some observers have suggested that the tax subsidies themselves are a significant part of the problem.
Calls have been made for eliminating the employer exclusion altogether and letting the market come up with cost-effective ways to supply health insurance to the public. Finance Committee chairman Chuck Grassley, R-Iowa, also raised concerns about the effectiveness of the tax subsidies.
Grassley's skepticism in this area raises doubts about the prospects for Senate passage of the centerpiece of the Bush administration's health reform agenda this year -- a major sweetening of existing tax incentives for individuals with health savings accounts.
Representatives of the business community, including Deere & Co. chief executive Robert W. Lane, testifying on behalf of the Business Roundtable association, said that such subsidies, alongside changes to HSA structures, are needed for the nation's existing health care system to reach its full potential.
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