Excluding from taxable income the moneys employers spend in providing employees with health insurance dates back to WWII-era wage and price controls. Today, this tax policy, that amounts to over $250 billion in lost federal tax revenue, effectively constitutes the third largest federal government expenditure on health care after Medicare and Medicaid. Few tax experts would disagree that the tax exclusion constitutes bad policy. Beyond lost tax revenues, the policy is, among other things, highly regressive, causes lower or stagnant wage growth, reduces health plan competition, contributes to excessive health care spending, incents the over-utilization of health care services, limits job mobility and negatively influences retirement decisions.
During this 25 minute conversation Dr. Antos discusses the extent to which the tax exclusion is responsible for employers providing employees with health care insurance coverage, what effect would capping or phasing out the exclusion have on coverage, how best can the policy can be reformed via a Cadillac tax or otherwise, what might be done to reform the tax exclusion under a Secretary Clinton administration and how the exclusion may play into future tax reform may legislation.
Dr. Joe Antos is the Wilson H. Taylor Scholar in Health Care and Retirement Policy at the American Enterprise Institute (AEI). Before joining AEI, Dr. Antos served as the Assistant Director for Health and Human Resources at the Congressional Budget Office (CBO). Dr. Antos has also held senior positions in the US Department of Health and Human Services, the Office of Management and Budget and the President's Council on Economic Advisers. He recently completed a seven year term as Health Adviser to CBO and two terms as a Commissioner of the Maryland Health Services Cost Review Commission. In 2013 he was named Adjunct Associate Professor of Emergency Medicine at George Washington University. Dr. Antos earned his Ph.D. and MA in economics at the University of Rochester and his BA in mathematics from Cornell University.
For more background information about the exclusion and micro-simulation data on reforming the exclusion, see Jonathan Gruber's 2011 article in the National Tax Journal, at: http://www.ntanet.org/NTJ/64/2/ntj-v64n02p511-30-tax-exclusion-for-employer.pdf.
What Can Be Done About Reforming the Employer Health Insurance Tax Exclusion: A Conversation with Dr. Joe Antos (August 5th)