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Tax Subsidies for Private Health Insurance - July 2009 Update
Who Benefits and at What Cost?
Published: July 2009
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Policy-makers are considering modifications to the tax treatment of employer-sponsored insurers (ESI) as a way to raise revenue to help pay for health reform and provide incentives to reduce health care costs. Understanding how current subsidies work is important to assessing health reform proposals. This brief is an update of a previous synthesis report published in 2003, and presents essential information about the structure and distribution of existing tax subsidies for ESI and the implications for policy options.
Key Findings:
- Federal tax subsidies for employer sponsored insurance will amount to more than $240 billion in 2010.
- Higher-income workers benefit the most from the current tax subsidies.
- Lower-income families pay the largest percent of income on insurance, but receive the smallest tax subsidy.
Policy-makers may want to think about ways to level the playing field including: Eliminating the tax exclusion for ESI, capping the tax exclusion for ESI; and allowing nongroup coverage to be purchased with pre-tax dollars.
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Tax Subsidies for Private Health Insurance
By:
Burman L, Goodell S, Khitatrakun S, Kobes D, Uccello C, Wheaton L and Williams C
Publication date:
May 2003
Summary:
Policy-makers are considering a variety of new tax credit proposals to expand health insurance coverage. Understanding how current tax subsidies work and their role in supporting employer-sponsored insurance (ESI) is important when designing such policies. This...
Synthesis Project
The Synthesis Project is an initiative of the Robert Wood Johnson Foundation to produce user-friendly briefs and reports that synthesize research findings on perennial health policy questions. These products give policy-makers reliable information and new insights to inform complex policy decisions.
Learn more about Synthesis Project.