Don’t Tax Health Care Benefits

October 08, 2009

Congressman Joe Courtney (D-CT) announced Wednesday that 156 Democratic members of Congress oppose taxing health care benefit plans to pay for health care reform. Rep. Courtney said:

“As Congress continues to work on comprehensive health care reform, it is important that we remember who we are fighting for and ensure that the people we are trying to help the most, aren’t hurt the most.”

More than sixty percent of the House Democratic Caucus opposes taxing health care benefit plans, which the House Members believe would be passed along by insurers to working families and individuals. This announcement follows weeks of AFSCME advocacy in opposition to raising taxes on insurance plans. Far from moving us in the direction of comprehensive health care reform, such proposals would only make the problem worse: costs would go up and fewer people would get the health care they need.

AFSCME President Gerald W. McEntee recently wrote an opinion editorial in USA Today defending members’ health care benefits and explaining why taxing family health care plans is not the way to finance health care reform:

Taxing high-cost insurance plans to fund health care reform is a bad idea. In fact, it could threaten the medical insurance plans of middle-class workers who obtain coverage from their employers. For many of them, especially those in states with high medical costs, there is nothing "gold-plated" about their health coverage.

In the end, while claiming to target gold-plated or Cadillac plans, this tax-raising scheme essentially is asking the middle class to pay for the health care for those who are currently uninsured. In an era of rising wealth inequality and stagnant middle-class wages, this tax would make health care less affordable for working families and ultimately inhibit economic growth while giving the wealthy a virtual free ride.

President McEntee also explained in the Washington Post why Congress shouldn’t tax benefits and discriminate against workers whose health insurance plans have high costs for reasons that have nothing to do with wasteful or unnecessary care:

The Congressional Budget Office reported in December that taxing these benefits would have a negative impact on workers in "firms that had higher premiums because of the age or poor health of their employees." Moreover, it reported, workers living in high-cost states — think New York and Maine — would be hit hard.

AFSCME believes reforming our health care system is an economic and moral imperative. Now is the time to reach our common goal of providing high quality, affordable health care for all. We should do so without adding to the burden on working families.