While the new congress and the administration set up, all Washington’s eyes focus on the billion dollars: if and how to pay for the dispositions expired by the tax on tax reductions and the 2017 jobs (TCJA), signed the law in the first mandate of President Trump.
Among the various income -generating proposals emerging from the Circles of the GOP – including some of the most reliable of the president advisers – is the one who increases taxes on American workers with health care coverage provided by the employer. How to pay the next tax bill is a valid debate, but one thing is certain: Americans who work hard with new taxes on something as fundamental as health care coverage are not the solution that voters are looking for.
We have seen proposals and recommendations of Paragon Health Institute,, Heritage Foundation,, Republican study committeeand the Cato Institute – All who have close links with President Trump – to tax health care coverage provided by the employer. The Bipartite Political Center also specifically highlighted a tax on health care provided by employers as an option to pay the extension of TCJA. Given the number of identical proposals from these conservative and bipartite opinion leaders, associated with a need for federal income, employers and unions are naturally worried that the benefits of workers could be imposed.
Health care coverage provided by employers is the cornerstone of American employment. More than 178 Millions of Americans have health care coverage provided by the employer. These are more people than Medicare, Medicaid, the exchange markets of the Act respecting affordable care (ACA), the benefits of health care and veterans combined.
Since their creation, these services have been “excluded” from income, which means that employees are not imposed on the costs that employers pay for their health care coverage. Any proposal to add new taxes to workers’ health coverage would undermine this system on which the majority of Americans and their families count.
Many American families find it difficult to keep up with the rate of increasing the cost of food, housing and other essential needs. Health care is no exception. According to Centers for Medicare & Medicaid ServicesAnnual health expenses per capita should exceed $ 15,700 in 2025 – an increase of 59% since 2015 – and reach almost $ 22,000 by 2032.
The arrow cost of health care is one of the fundamental economic challenges of our time. It is a crisis born of multiple problems: inflation, market consolidation and a lack of prices transparency, among others. This would add the insult to injuries (and illness) if the most vulnerable workers are forced to pay insurance taxes which makes it possible to allow the ever -increasing cost of health care. As demonstrated in the electoral evening of 2024 vote93% of voters want health care coverage provided by employers to remain free from tax because it encourages employers to provide high -quality affordable health care coverage.
Policy proposals to the coverage of tax health care may vary depending on the design, but a option Examined by the Congressional Budget Office could leave a family that works $ 35,000 by paying an additional $ 1,100 in taxes in 2025 and by 2030, inflation would increase it to an additional $ 2,325 in taxes, which resulted in a tax charge of 62%.
A few supporters tax coverage affirms that they would only impose a tax on those with higher income or “Cadillac” plans. But once the concept is dedicated to law, whenever Congress needs billions of dollars – perhaps to pay an initiative completely unrelated to health care – this could reduce the dial (or let inflation do it for them), subjecting many more people to tax.
What end? The real objective may be to repel employers from their role as a sponsors of health care coverage. It would be deeply counterproductive. Not only do employers add value and innovation to the design and functioning of health care coverage, but government data show that employers’ coverage is a huge deal for the American taxpayer.
According to The White House management and budget office216 billion dollars in workers and families were attributable to the exclusion of income tax for health coverage provided by the employer in 2023. In the meantime, The economic analysis office said that employers’ group health insurance funds paid $ 1.3 billion in the same year. A calculation behind the entrance of $ 1.3 billion divided by $ 216 billion reveals that each dollar in federal spending gave approximately $ 6.02 in services for covered employees and their families – a return of more than 6 to 1 on government investment.
The health insurance provided by the employer does not only bring Value for the economyBut of all the options of health coverage in the United States, it also gives The best shot for the taxpayer’s male. On an annual basis per patient, the government (and taxpayers) pay the most for Medicare at nearly $ 18,000 per inscriber, then the stock markets of the affordable care law at nearly $ 6,000 per registration, then Medicaid to more than $ 5,500 per registration, and finally employers’ plans at $ 2,000 for registrations. Although a part of this delta reflects the state of health and demographic differences, it is sure to say that employers’ plans are always a good deal for taxpayers in comparison. Recent Congress Budget Office data Also indicate that with improved ACA subsidies, the cost of the Federal Government of the Exchange Market will in fact will be more than $ 6,000 this year and exceeding $ 7,000 in 2027. If the congress will make the wrong choice and eliminates the exclusion of the health care tax, people who leave employers’ coverage will probably be forced to the more expensive health care market.
In addition, if the policy is designed to target employers, they could completely reduce the advantages or decrease coverage, potentially increasing the number of uninsured Americans.
According to the centers for disease control and preventionThe most common reason why adults aged 18 to 64 choose to remain uninsured is that the coverage is unaffordable. This means that more healthy adults are likely to do without coverage than to absorb a significant increase in their health care costs. When healthy adults leave the pools of risk of large groups, bonuses increase even more for those who remain insured.
In 2019, President Trump signed a bipartite bill to repeal the 40% tax of the 40% of the Employers Act – then known as “Cadillac Tax”. This tax worked as a ceiling on exclusion but was designed with a different policy mechanism. The biggest question is now: President Trump will double his support for millions of American workers and their families by rejecting the tax proposals for the first time health benefits.
There is a large bipartite support to protect the coverage of workers’ health care and the proposals opposed to short views and erroneous of the tax benefits for health. As the current president of Unit Here Health and president of the American Benefits Council, we recently joined a large group of stakeholders of 70 groups of employers, unions, groups of patients and other stakeholders in health care that exhorted Congress In order not to disrupt the vital health coverage provided by the employer on which the majority of Americans count for living care every day.
The congress must reject any proposal with all my heart that seeks to undermine the health and financial security of American workers.
D. Taylor is the current president of Unite Here Health. Katy Johnson is president of the American Benefits Council.
Correction: a previous version of this test disturbed the position of the Bipartian Policy Policy Center on the taxation of health benefits.