September 8, 2009

What is fair in health care reform?

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Congress is considering bringing parity to taxation of health care benefits.

The plan, touted by Sen. Max Baucus (D-Montana), the chair of the Senate Finance Committee, would tax high-end corporate health care benefits to pay for wide ranging reforms of the U.S. health care system, according to Ken Bensinger of the Los Angeles Times.

Sen. John Kerry (D-Mass.) first introduced the plan this summer, arguing that the tax would compel insurers to reduce their costs and allocate their expenses in a more equitable way.

Businesses pay taxes on their lower paid workers’ benefits, so officials say the move would correct a regressive tax structure.  Employers would pay the tax, rather than employees.

But labor unions could cozy up to insurers and big business to fight the proposal because they are concerned that the cuts could go deeper, and that insurers would raise premiums or eliminate services to counteract their effect on profits.

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