The economic rationale for Mr. Bush’s proposal is that too many people have “gold-plated, deluxe” health insurance, which encourages them to use excessive amounts of health care, driving up costs for everyone.Keep the last words of the article in mind:
Katherine Baicker, a member of the president’s Council of Economic Advisers, said the proposal would increase taxes for 30 million people with the most generous employer-provided health benefits, unless they “change their behavior” and choose less costly coverage. Ms. Baicker said the proposal would cut taxes for more than 100 million people who bought insurance on their own or had employee health benefits worth less than the standard deduction.
First, Mr. Josten said, the $15,000 cap on tax-free insurance takes no account of wide geographic variation in the cost of health care and insurance. The same package of benefits typically costs more in Boston than in Minneapolis, for example.The large print giveth, and the small print taketh away.
Moreover, Mr. Josten said, a health plan may be expensive because it covers older workers with major medical problems, not because it is “gold-plated.” A single mother, working as a low-paid secretary at a law firm, could be pushed into a higher tax bracket because she participates in an $18,000 health plan covering older men who have had heart attacks and expensive surgery, Mr. Josten said.
Treasury officials acknowledged that some people with costly, comprehensive benefits had modest incomes.
But deluxe health plans are vanishing fast. In recent years, many workers have found themselves paying more for less comprehensive benefits. From 2000 to 2006, premiums for employer-sponsored coverage rose 87 percent, about four times as fast as workers’ earnings, according to the Kaiser Family Foundation.