As this article's title suggests, Congress is proposing to tax insurance companies on the most expensive and lavish policies they offer, policies that apply almost exclusively to the top executives and officials at many large private companies. Under current law, employer-paid health insurance premiums are exempt from taxes, but a bill introduced by Senator John Kerry proposes a tax that would generate 18 billion dollars a year for the government, as well as potentially lower overall healthcare costs because these insurance companies would be under pressure to reduce their higher premiums to avoid the tax. With their pricey coverage, top executives rarely endure any out of pocket costs on their healthcare checkups or prescriptions, while rank-and-file employees are left with paying for large chunks of their own insurance premiums.
So it seems like this tax is a great revenue plan for the government to help pay for new health care reform plans, yet controversy surrounds the issue as this tax, which is not aimed directly at workers whatsoever, would certainly indirectly affect workers because insurers would react to it “by cutting benefits, raising premiums on some plans to pass along the costs or eliminating some types of coverage altogether.” This is a shared view of many workers, companies, and organized labor unions such as the AFL-CIO. Because U.S. companies also are not required to disclose how much they spend on their executives’ health care coverage, “[t]he current system encourages overconsumption and it rewards those with higher income disparity,” said Len Burman, a former Treasury Department official and now professor of tax policy at Syracuse University. What many of those labor unions and workers support is a further tax on those making over $250,000 a year to help cover the 47 million uninsured Americans today. This, they say, would take away the disproportional rewards for those in the higher income and tax brackets.
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I agree with the concern raised by some with regard to workers being indirectly affected by a tax on employer-paid health insurance premiums. It is assumed that the insurance companies, to offset the monetary losses from the proposed tax, would pass on costs to middle class workers. I feel that this tax neglects the fact that insurance companies are in existence as a business--their end goal is to make money. It is ideal to have companies that would make conscientious decisions and not cut benefits and coverage to lower workers, but that does not always occur.
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