Yesterday, during an appearance on Fox News Sunday, Austan Goolsbee, a member of the White House Council of Economic Advisers refused to comment on whether the administration is seriously considering taxing health benefits to finance health care reform:
That is not in the President’s budget…it does not include this provision. This appears to be coming from the administration and representatives of the administration who went to Congress and said we are open to all ideas to pass health care reform…there are some people in Congress who are pushing for this, but that is not the President’s idea….he is open to all ideas. He said, let’s put all ideas on the table. That is not the president’s idea. It is not in his health care plan, it is not in his budget.
Watch it:
The press has argued that the “proposal is politically problematic for President Obama,” since it is similar to one he denounced in the presidential campaign as ‘the largest middle-class tax increase in history.” But in reality, the the consequences of Obama’s proposal are quite different.
The problem was never the tax exclusion itself. Rather, progressives were concerned about what would happen to individuals who lost their employer-sponsored health coverage once the tax code changed. McCain proposed replacing the employee deduction with a one-size-fits-all tax credit without reforming the health insurance market or expanding access to group coverage. Under his plan, Americans who lost their employer coverage would have had to fend for themselves in an unregulated individual health insurance market; Americans with pre-existing conditions would have joined the ranks of the uninsured.
Obama is using the measure as a means to finance comprehensive reform. Should someone lose their employer-based coverage, they will be able to purchase affordable insurance through a regulated exchange that cannot deny coverage to Americans with pre-existing conditions.
The theory behind capping the health exclusion rests on the assumption that the tax-preferred status of employment-based health coverage leads workers to over-insure and use more health care services than they otherwise would. Overuse of insurance drives up insurance premiums and makes coverage less affordable for lower-income workers. Read more
