Yay

05.29.13

Learn to Love the Cadillac Tax

I'll reluctantly support a Cadillac tax, if only as a precursor to one day removing the tax exemption for employer health insurance spending. Quoth Jonathan Cohn in The New Republic:

The story is about Obamacare's "Cadillac Tax," which isn't really a tax so much as a convoluted attempt to undo an existing tax break. To simplify things a bit, the government today doesn't treat employer health insurance as taxable income. That makes a dollar of insurance worth more than a dollar of wages, giving both employers and employees incentive to load up on insurance.

Most economists think that contributes to rising health care costs, since people with more insurance tend to spend more on medical care. The Cadillac tax would limit the value of the tax break, effectively reducing that incentive and, in theory, reducing health care costs for everybody over the long run.