Kaiser Health News, February 3, 2017
Jay Hancock


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[...] Any new health law needs substantial revenue to replace the Cadillac tax as well as ACA taxes on health insurers, medical devices and high-income households that paid for care expansion — assuming those measures are repealed. Otherwise, it risks stranding the millions getting government-subsidized Obamacare coverage.

One tempting solution for Republicans, big business worries, is to limit the exemption from income and payroll taxes that job-based coverage has enjoyed for decades. Taxing workers and employers for health benefits could raise billions to pay for a replacement plan.

Such a measure has occasionally been floated by Republicans since the days of President Ronald Reagan, often under the argument of leveling the field between employer plans and other coverage that the tax code treats far less generously.

Republicans are far from consensus on what a replacement should look like.

But capping the tax exclusion for employer plans is in replacement legislation introducedby Rep. Tom Price, the Georgia Republican poised to become secretary of Health and Human Services. It’s also in House Speaker Paul Ryan’s Better Way plan. A third proposal would keep the ACA taxes.

Depending on how it’s structured, limiting the employer-plan loophole could add hundreds of dollars to workers’ tax bills as a portion of their expensive health insurance is counted as taxable income. [...]

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