subject: Do we need health care? [print this page] Do we need health care? Do we need health care?
In the name of reducing the federal deficit, leaders from both political parties have suggested shrinking or eliminating healthcare tax breaks.
Job-based health care benefits could wind up on the chopping block if President Barack Obama and congressional Republicans get serious about cutting the deficit. Budget proposals from leaders in both parties have urged shrinking or eliminating tax breaks that help make employer health insurance the leading source of coverage in the nation and a middle-class mainstay.
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.
Labor unions believed they had squelched any such talk. Now, they're preparing for another fight.Tampering with health care tax breaks is "a terrible step in the wrong direction," said Mary Kay Henry, the new president of the Service Employees International Union, which represents many hospital workers. "We want the middle class stabilized, not destabilized."s.
The leaders of Obama's deficit commission -- Democrat Erskine Bowles, a former Clinton White House chief of staff, and Alan Simpson, a former GOP senator from Wyoming -- have proposed to limit the tax break or eliminate it along with other cherished deductions, such as the one for mortgage interest. That would allow for a big cut in tax rates. The commission is supposed to report its plan on Wednesday. It's unclear if leaders have the votes to back their sweeping changes..
A separate group, the Bipartisan Policy Center, is proposing to cap the health care tax break in 2018 and eliminate it over the next 10 years. That's part of a deficit reduction strategy from Democrat Alice Rivlin, a former Federal Reserve vice chairman, and former Sen. Pete Domenici, R-N-M., who once led the Senate Budget Committee.
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."."
