Killing the federal group health tax break could cut the percentage of Americans with employment-based health coverage in half. But capping the exclusion at the median premium would simply lead to a modest reduction in the percentage of people with incomes over 200 percent of the federal poverty level (FPL) who have coverage.
Allison Percy, an analyst at the Congressional Budget Office (CBO), makes those predictions in a slide deck she prepared for a presentation she delivered at the American Society of Health Economists.
Federal budget officials have been complaining about the effects of the group health tax exclusion for years. In 2008, for example, Bush administration budget officials noted that the exclusion was costing the U.S. Treasury about $168 billion in lost income tax and employer withholding tax revenue.
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Last year, CBO officials were estimating the group health tax exclusion is costing the country about $250 billion per year in lost tax revenue — and will continue to do so, even after a Patient Protection and Affordable Care Act (PPACA) excise tax on high-cost plans, or “Cadillac plan tax,” takes effect in 2018.