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View Diary: Republicans rethinking one of their few ideas for health reform (49 comments)

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  •  Policy Schizophrenia . . . (0+ / 0-)

    If you think the screaming a few months ago about the cadillac tax was loud (cadillac tax is really just a "cap" on the amount of employer based health benefits that can be provided tax free), just wait until a cap of zero gets floated.  

    The tax treatment of employer based health benefits can be criticized -- for instance, it is protected from both withholding and SS tax, unlike wages and nearly all other benefits.  That means employers and employees are strongly economically influenced to plow compensation into health care benefits instead of wages, which does have an impact on the overall cost of health care in this country (it's indirect but real), and also magnifies the disparity in income between generations (young people use health care less and might prefer more of their compensation to be in the form of wages).  

    Hence the cap and its role in reducing the increase in health care costs.  

    But going to zero would be like a tsunami to current health policy.  Much better to make the cap get gradually lower due to inflation or something like that, so that it would gradually neutralize the financial benefit of getting insurance through employers.  

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