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Ways & Means witnesses attack group health exclusion

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Witnesses at today’s House Ways & Means Committee health tax policy hearing continued the long-running war against the group health income tax exclusion. 

See also: House Ways and Means schedules health tax hearing

Joseph Antos of the American Enterprise Institute and Avik Roy of the Manhattan Institute blasted the current, unlimited version of the tax exclusion, which helps employers cut their taxes by about $500 billion per year.

“Workers with higher incomes benefit most from the exclusion,” Antos said at the hearing. “It’s a regressive kind of tax.”

Roy said both Republicans and Democrats can agree on the principle that health care ought to be more affordable. The current tax exclusion works against that goal, he said.

“Hospitals, doctors, and drug companies have a powerful incentive to charge high prices here, because the exclusion from taxation of employer-based insurance prevents patients from controlling their own health care dollars and thereby holding companies accountable for the prices they charge,” Roy said.

Antos and Roy said the country should move toward a new tax credit system that would help lower-income people more than those with a higher-income.

Steven Kreisberg, a collective bargaining specialist at the AFSCME, a union, defended the group health tax break.

Limiting the tax exclusion, or imposing new taxes on the workers who benefit from the exclusion, would punish employers for providing, and workers for receiving, the kinds of comprehensive health benefits that every American ought to have, according to Kreisberg.

Rep. Sander Levin, D-Mich., spoke out against the witnesses’ proposals to revamp the group health tax exclusion. “You want to destroy the basis on which we built the current system,” he said.

Some Republicans on the committee, including Rep. Mike Kelly, R-Pa., and Rep. Jim Renacci, R-Ohio, also seemed to resist the idea of changing the group health tax exclusion. Renacci described a change in the exclusion as “throwing another wet blanket” on the employers already struggling to afford group health benefits.

Employers’ view on that is that, “‘You want to hurt us again,’” Renacci said.

Meanwhile, Kelly said the committee was using fancy language to hide the fact that it was talking about squeezing more tax revenue out of employers.

“We’re forgetting about the most important part of this,” he said. “The people who are providing the revenue.”

Also at the hearing:

  • Rep. Charles Rangel, D-N.Y., asked Roy to get two proposals for replacements for the Patient Protection and Affordable Care Act (PPACA) expressed in the form of draft legislation and scored for federal budget impact by the Congressional Budget Office (CBO). And Rep. Tom Price, R-Ga., offered to help Roy do that.

  • Some Democrats pressed Roy and Antos on whether they think health care is a right or a privilege. Rep. Charles Boustany, R-La., said that’s the wrong way to talk about the issue. “It’s a personal responsibility,” he said.

  • Renacci questioned the idea that workers want tax credits or other mechanisms they can use to choose their own coverage. “They don’t want to make those decisions,” he argued.

See also: 

5 more ways a Republican Congress could change PPACA

CBO: What if we shrink the group health tax break?


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