The question of how to pay for universal health care could lead to a troubling answer: taxing health benefits. Congress and the Obama administration will be weighing a variety of approaches in the coming months, with the goal of offering legislation before the August recess. Some legislative leaders, such as former Presidential candidate Sen. John McCain, R-Ariz., and Senate Finance Committee Chairman Max Baucus, D-Mont., have advocated taxing health care benefits as one way to pay for an expensive health care overhaul. Up to now, these benefits have been tax-free.
Such a tax would be a hard sell in almost any environment, but today’s financial crisis just makes it even more problematic. Proposals for some form of means testing, or for taxing only the most all-encompassing “gold-plated” health plans, are not likely to win over many adherents, as employees at many companies still enjoy fairly generous health care plans, even if their jobs aren’t exactly of the gold-plated variety.
Also, as more companies force their employees to absorb an ever greater share of health care costs, having that much more taken out of workers’ paychecks by the Internal Revenue Service would only add insult to injury.
As workers see layoffs happening in nearly every industry while wages stagnate if not outright disappear, relatively few are likely to be willing to volunteer for further erosions in their paychecks just to reduce the ranks of the uninsured to some abstract goal. While it is important to close the gap between the insured and uninsured, there are better ways than by raising taxes on those who depend on their health care plans for their survival.
One such way is to cut down on the needless duplication of insurance forms processing that takes up so much time and effort at doctors’ offices and hospitals. We do not need to reduce compensation to health providers, but there are ways to save money that can help provide care to those who desperately need it.
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