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News of the Day ... in Perspective


Congressional report blasts tax break for employer-provided medical insurance

On Dec. 17, the congressional Joint Economic Committee has issued a paper on how the health benefit tax exclusion distorts the medical insurance market. (jec.senate.gov/_files/HealthTaxExclusion.pdf)

The federal tax benefits for health-related spending amounted to $137 billion in 2002, writes senior health economist Tom Miller.

The unintended consequence has been to raise the overall cost of both medical insurance and medical care. Moreover, under the structure of the resulting system, employers make important medical decisions for their workers.

The system hurts workers who would prefer to receive higher wages in return for paying more of their own medical costs and also hides the full cost of medical care from covered workers, Miller states.

Committee Chairman Robert Bennett (R-ID) says that Congress needs to shake up the status quo. “We must give greater consideration to alternatives to employer-provided insurance and expand the use of consumer-drive health care options.”

Additional information:

“Shopping at the IRS Mall” by Gerry Smedinghoff

The central role of health benefits managers - PDF

Health Care Crisis: Made in Washington, AAPS News August 1992

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