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With Job-Based Healthcare Ailing, It May Be Time to Seek a Cure

Columnist Ron Brownstein discusses Jason Furman’s Democracy article on health insurance and the tax code.

By The Editors

In a piece on the unraveling of employer-based health insurance, Ron Brownstein writes

In an essay published this month in the new journal Democracy, Jason Furman, a visiting scholar at New York University and former economic policy aide to President Clinton, said that tax policy would be the key to any shift away from the employer-based healthcare system.

The existing tax subsidy for insurance, Furman said, perversely benefits upper-income workers more than lower-income ones. The reason is that under the progressive income tax, the affluent pay higher tax rates on their income. So it would cost them more than low-income workers if government taxed the value of employer-provided insurance.

Furman wants to reverse that equation. He says that if government eliminated the current tax subsidy for employer-provided coverage (which costs Washington about $200 billion a year), the savings could fund a tax credit that would help all Americans purchase basic health insurance. That structure, he said, would provide the biggest subsidy to the least affluent.

“We should spend less subsidizing more expensive insurance Oe for higher-income people and spend more to help moderate-income families obtain the health insurance they lack,” Furman wrote.

A first step, he said, might be to limit the amount of insurance employers could provide tax-free, and to use the savings to fund coverage for some of the nearly 46 million uninsured.

Read the rest here.

The Los Angeles Times

The Editors of Democracy: A Journal of Ideas are Michael Tomasky (Editor), Jack Meserve (Managing Editor), and Sophia Crabbe-Field (Associate Editor).

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