Health Care Tax Policy

1
Health Care Tax Policy

• Just a lot of Buzz
• or
• Changes on the Horizon?

2
HCR tax policies on the table

• 1. employer exclusion modification
• 2. new individual tax credit
• 3. new small business tax credit
• 4. elimination of HSA special tax treatment

3
The Big Kahuna Employer exclusion modification

• Why take it on?
• Regressivity
• Revenue (the big kahuna)
• Transparency
• At the same time, dont undermine the ESI pillar.

4
Employer exclusion modification

• Tough Design Considerations
• move employers away from offers of comprehensive
  coverage
• administrative costs/complexities to employers
• administrative costs/complexities for IRS

5
Employer exclusion modification

• Tough Political Considerations
• Will employers oppose hcr over this issue?
• How much money will a modification really raise?
• Is the opposition of this powerful lobby worth
  the money?

6
New Individual Tax Credit

• does not undermine public program coverage for
  lower income (other pillar of hcr)
• does not undermine esi
• significant size (income related)
• refundable, advanceable
• used for group-like coverage
• in a market with rate setting/rate review
• for quality coverage (w/ oop protections)

7
Health Savings Accounts

• Bad economic theory
• skin in the game
• Bad tax policy
• Money in tax free
• Money earned tax free
• Money out (medical expenses) tax free
• Bad health policy
• Poorly targets uninsured
• fragments market hurting sicker, older folks