Brief Changes to the Tax Exclusion of Employer-Sponsored Health Insurance Premiums: A Potential Source of Financing for Health Reform
Lisa Clemans-Cope, Stephen Zuckerman, Roberton C. Williams
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Many have suggested that reducing or eliminating the tax exclusion of employer-sponsored health insurance (ESI) could generate significant additional tax revenue to fund expansions in health insurance coverage. In this paper, we focus on two specific policy design elements: (1) a cap, or dollar limit, on the amount of employer-sponsored health insurance premiums excluded from taxable income; and (2) an index that determines how this cap might grow over time. Our analysis shows that limiting the tax exclusion would provide substantial funding for health reform and mitigate the huge inequities built into the current treatment of employer premiums.
Research Areas Health and health care Wealth and financial well-being Taxes and budgets
Tags Health insurance Health equity Wages and nonwage compensation Individual taxes Federal budget and economy
Policy Centers Health Policy Center