What Real Bipartisan Health Care Reform Looks Like

Conn Carroll / May 19, 2009

The Washington Post editorializes today:

Unlike wages, health coverage is not subject to income or payroll taxes. This exclusion is the single largest subsidy in the tax code; it is projected to reduce federal tax revenue (both income and payroll taxes) by more than $200 billion next year. This arrangement is not only costly, it is also unfair. Because higher-paid workers are taxed at higher rates, they enjoy a larger benefit from not having to pay taxes on the health insurance they receive. Furthermore, the exclusion is counterproductive: tax-free health benefits encourage employers to provide more compensation in the form of health insurance and encourage insured individuals to use more health care than they would if they had to pay with after-tax dollars. The result is higher health-care costs.

We couldn’t agree more. Heritage fellows Greg D’Angelo and Robert E. Moffit wrote in March:

If there is one area in health policy where there is a powerful consensus among serious analysts, conservative and liberal alike, it is the need to change the existing tax treatment of health insurance. President Ronald Reagan first proposed a change to the tax law governing health insurance in 1983, but Congress never acted on the proposal. Six years later, analysts at The Heritage Foundation unveiled a national health reform proposal grounded in comprehensive tax reform. Now, the idea could—depending on its details—potentially serve as the basis of a bipartisan compromise on health reform in the coming months. (more…)