A 2004 study found that tax breaks on health benefits averaged $2,780 for families with incomes of $100,000 or more, but $102 for those with $10,000 or less, wrote Jonathan Oberlander, a professor of political science and health policy at the University of North Carolina at Chapel Hill, in a recent article in Health Affairs.
Limiting the amount of healthcare premiums that can be excluded from taxable income to $4,000 for individuals and $11,000 for families would generate $1 trillion over the next decade, Oberlander wrote, citing a 2007 report by the Congressional Budget Office. That’s roughly the cost of the health reform plan Obama put out in the campaign, according to a recent assessment by PricewaterhouseCoopers.
But even a cap of that size would mean that many middle-class people would suddenly have to pay taxes on some of the income they now use to pay health premiums – the average cost of employer-based health benefits is about $4,700 for single coverage and nearly $12,700 for family plans.
I don’t know if a cap is a good idea, even as an interim measure, but this article really is channeling the FUD from the no-reform-ever crew at the insurance companies.
First point: $100,000 is twice the median household income in the US. Sure, you can stretch and call that “middle-class”, but only because the growing income inequality of the past decades has made the median income somewhere between “lower-middle” and “lower” in purchasing power.
Second: if we take these numbers, we see that the average individual making more than $100K and having health insurance at all would be paying tax on $700 over the cap. Their bill would be somewhere between $250 and $300 — a horrific cutback in spending of a latte and a half a week to fund universal healthcare. The family making over $100K (or would it be $200K, depends how things are written) would be paying an extra $500, give or take. That’s worse: one latte a week for each parent and two, maybe even four fewer cute outfits a year for the offspring. How will those making so much more than the median income ever survive?