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Changing The Tax Code To Create Consumer-Driven Health Insurance Competition, Regina Herzlinger, Barak D. Richman
Changing The Tax Code To Create Consumer-Driven Health Insurance Competition, Regina Herzlinger, Barak D. Richman
Faculty Scholarship
Because current tax laws exclude employer-paid health insurance premiums from employees’ taxable wages and income, employer-sponsored insurance remains the primary source of health insurance for most employed Americans. Economists have long blamed the employer-based insurance tax exclusion for inflating health care costs, and, more recently, for constraining income growth and exacerbating income inequality.
We execute a simulation to test the effect of permitting employees to receive their employers’ premium contribution directly and then purchase health insurance themselves, using tax-free funds. Employees could deduct for income tax purposes the amount used for insurance and, if they spend less than the amount …