NU Online News Service, Dec. 18, 2003, 5:55 p.m. EST – The congressional Joint Economic Committee has issued a paper that blasts the current U.S. system of treating employer-paid health insurance as a tax-free benefit.[@@]
“The Health Benefit Tax Exclusion Distorts The Health Insurance Market,” according to the headline on the press release announcing the release of the study.
Exempting employer-paid health benefits from federal and state income taxes “helped foster rapid growth of employer-sponsored group health insurance in the United States, but it also created unintended consequences for the structure, cost and availability of both private health insurance and health care that continue today,” Tom Miller, a senior health economist at the committee, writes in the paper.
The current system hurts workers who would prefer to receive higher wages in return for bearing more of their health care costs, and it also hides the full cost of health care decisions from the covered workers, Miller writes.
Miller points out that the percentage of U.S. workers covered by employer-sponsored group plans fell to 61% in 2002, from an all-time high of about 70% in 1987.