The beginning of the end for employer sponsored health insurance?

Employer-sponsored health insurance is a tax free benefit, which is a major reason that health insurance is tied to employment in this country. That may be change, because the bipartisan tax-overhaul commission is about to recommend limits on that deduction.

According to the Wall St. Journal (Bush Tax Panel Targets Mortgages),

If the commission moves toward recommending a ceiling on employer-provided health insurance, it could affect only the most generous health plans. Panel member Timothy J. Muris… suggested that the ceiling should be around $11,000 for family coverage… A tax would be applied on the amount over the agreed ceiling.

According to a September survey by the Kaiser Family Foundation, the annual premium for covering a family was about $10,800.

That sounds reassuring, but if health care costs continue to rise at 10% per year, that $10,800 will become $25,500 in 10 years. The ceiling for the Alternative Minimum Tax (AMT) isn’t indexed for inflation at all –as a result a program that was originally meant to snare the ultrarich now affects the middle class. Even if the health insurance cap is indexed, I can’t imagine it being indexed above the overall cost of living –something like 3%.

October 12, 2005

3 thoughts on “The beginning of the end for employer sponsored health insurance?”

  1. Currently the percentage of those without health insurance cover varies from 14 – 18% of the population. Most of those VOLUNTARILY choose to go without cover even though they could afford to pay for a policy.

    The sense of entitlement among many American workers is that employer provided health insurance is a right, not a privilege. If employer plans are banished, or curtailed, expect the number of uninsureds to rise dramatically, creating even more cost shifting than currently exists.

    Then see what happens to the cost of care . . .

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