Friday, August 28, 2009
"Health Care’s Taxing Problem"
Health insurance has a big connection to our tax laws.
It's one of those things that no one is talking about...
It's one of those things that no one is talking about...
At NationalReview.com, Regina Herzlinger explains it. She begins:
"Mainstream economists generally agree that current U.S. tax policy for health insurance is fundamentally irrational, regressive, and ultimately destructive. Fixing this system should be one of Congress’s top priorities when it comes to health reform. Sadly, the current Congressional health-reform proposals would leave the worst feature of the current system in place and make a bad situation worse.
Current tax policy generally permits employers, but not individuals, to use pre-tax income for buying health insurance. Therefore, it is much cheaper to buy insurance through an employer than in the individual market. Because tax-exempted employer-based insurance is not portable — workers can’t take it with them when they change jobs — this harms labor mobility: People hesitate to leave jobs at big firms that provide health insurance to work for small firms that might not. The phenomenon, known as 'job lock,' robs small firms of talent and slows U.S. job growth, because small, entrepreneurial firms have generated 70 percent of new jobs."
