How to cover the cost of insuring all Americans? That is the trillion dollar question on the Hill right now. And it appears that taxing health insurance benefits is fading fast as the answer.
The bottom line is that it’s unpopular with voters, and hence, the senators who depend on them for re-election next year. This includes majority leader Senator Harry Reid.
At least one telephone poll estimates that barely 30% of voters support a tax on benefits, compared with 55% who support limiting tax deductions for families who make over $250,000 a year. The latter is a solution President Obama has long favored.
It’s a good example of just how complex the nuts and bolts of actually implementing health care reform are.
An option that Max Baucus, chair of the Senate Finance Committee, is considering would tax health benefits above a threshold slightly higher than the basic health plan offered to federal employees, a figure estimated at $17,000 a year for a family.
But this would affect urban and rural states differently. Whereas urban states have a large number of unionized workers who would feel the tax most, few people would be affected in rural states.
As California Democrat Barbara Boxer, who herself is up for re-election next year, explains, “Working people in many cases have given up raises in pay and instead have gotten health benefits, so it seems unfair to now tax their benefits. I think that would be changing the rules in the middle of the game in a way that is so harmful and would set them back, so I have a real problem with that, ” reports The New York Times.
The idea hasn’t been summarily dismissed yet, but it does seem fated for the growing trash pile of health care reform ideas.