Am Enterprise Institute: The Problem with the Biggest Tax Break in America

The American:

As Congress digs into the issue of healthcare reform, an important issue lurks: what should be done about employer-provided health insurance? Should it be encouraged, by strengthening the carrots and sticks that lead employers to provide health insurance? Or should it be discouraged, by treating employer-provided health insurance as taxable compensation, thereby removing some of the incentive for obtaining health insurance on the job?

Employer-provided health insurance is the primary mechanism by which Americans under 65 obtain health insurance. Of those households that are in the individual health insurance market, because they are neither eligible for public assistance through Medicaid nor are covered by employer-provided health insurance, the majority choose to go uninsured. Those of us who would like to see employer-provided insurance phased out have the burden of coming up with something that would replace it.

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