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AAHP-HIAA Rejects Attack On Group Health Tax Breaks

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NU Online News Service, Dec. 23, 2003, 6:06 p.m. EST – The AAHP-HIAA, Washington, is defending the value of using tax breaks to encourage U.S. employers to provide employee health coverage.[@@]

“Employers do a pretty good job of reflecting employees’ wants and needs,” says AAHP-HIAA spokesman Mohit Gose.

Gose gave an interview to National Underwriter to respond to questions about a new paper by Tom Miller, a senior health economist on the staff of the congressional Joint Economic Committee, that attacks the practice of letting employers deduct health insurance premiums from taxable income.

Miller, a former director of health policy studies at the Cato Institute, Washington, repeats arguments he made while at Cato that current subsidies for employer-sponsored coverage hide the true cost of health care from insured employees and distort the health insurance market in many other ways.

Sen. Robert Bennett, R-Utah, the chairman of the Joint Economic Committee, has issued a statement endorsing Miller’s analysis.

“We can’t preserve the status quo for another 60 years,” Bennett says. “We must give greater consideration to alternatives to employer-paid group health plans.”

Bennett recommends that Congress look at ways to foster alternatives to the current system, such as defined contribution health plans.

AAHP-HIAA and its member companies agree on the need to promote alternatives to traditional coverage, Gose says.

“We should be working at providing as many options as possible for employers as well as employees,” Gose says.

Some surveys have shown that up to 50% of U.S. employers may offer defined contribution plans within the next 5 years, and many AAHP-HIAA members are looking at ways to use the health savings account section of the new Medicare Prescription Drug, Improvement and Modernization Act of 2003 to offer new forms of health coverage to individuals, Gose says.

But employers tend to have more negotiating power than individuals, and, in many ways, the current health finance system works very well, Gose says.

Although consumers sometimes worry about the overall state of the U.S. health finance system, “overwhelmingly, people are satisfied with the care that they personally receive,” Gose says.


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