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WE BELIEVE President Bush's plan to tax employees on health care premiums would neither be as damaging as critics say nor do what the administration says it would.
As we report on page 1, employees would be taxed on the cost of their health insurance above a stipulated amount. If the cost were less, employees would end up with a lower tax liability.
And for individuals, such as those working for employers not offering coverage, they could fully deduct the cost of premiums, significantly reducing the policy's cost.
Some congressional Democrats make no bones about what they think: They hate it. Take House Ways and Means Health Subcommitte Chairman Pete Stark, D-Calif. He says the proposal "would eliminate employer-provided coverage, through which 160 million Americans are covered."
That's absurd. Most employees wouldn't be subject to new taxes under the proposal. For those who would, the increased tax bite would be relatively small--hardly reason for an employer to terminate coverage and force employees to find their own coverage.
At the same time, we are not convinced of the underlying premise of the proposal: that letting employers offer tax-free health insurance encourages employees to opt for the most generous plans, making them poor health care consumers and leading to higher prices charged by providers.
Such a belief ignores the real world. Gold-plated plans are a thing of the past. Employers cannot afford them and have opted for plans with more cost sharing. Whether tax law is changed or not, that is the direction that employers--to stay competitive--are going.
Having said that, we support the administration's plan to give the same tax breaks to those who buy health insurance on their own as those who receive it through their employers. The tax-favored status of coverage shouldn't rest on whether the coverage is purchased by an individual or by an employer.
Perhaps the most important point in the proposal is that it shows the administration is interested in working to reduce the number of uninsured. We hope its proposal is a catalyst for federal action--now sorely missing--in that area.