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Panel To Eye Health Tax Breaks

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The Senate Finance Committee plans to hold a hearing Thursday on federal health benefits tax incentives.

Witnesses scheduled to appear include Jonathan Gruber, associate head of the economics department at the Massachusetts Institute of Technology, and Kate Baicker, a health economics professor at Harvard University’s public health school.

Gruber has written academic articles contending that the existing tax breaks for employer-sponsored health coverage are an inefficient tool for getting employers to cover the uninsured.

In a 2004 paper, Gruber estimated that “public insurance costs the government only between $1.17 and $1.33 per dollar of insurance value provided, [and] tax policies cost the government between $2.36 and $12.98 per dollar of insurance value provided.”

Gruber has argued that tax credits aimed at employers are more efficient than tax credits aimed at employees.

Baicker also has argued that current tax subsidies for employer-sponsored health coverage are inefficient.

One problem is that the subsidies encourage people to get deluxe policies from their employers rather than to buy basic policies on their own, Baicker has argued.

Baicker has supported efforts by the Bush administration and others to replace the current employer health benefits tax incentive system with a flat credit or deduction to reduce the influence of the tax code on health coverage purchasing decisions.