HR Policy Urges Caution as Key House Committee Examines Changes to the Tax Treatment of Employer-Provided Health Care

April 15, 2016

This week, the House Ways and Means Committee held a hearing where witnesses discussed potential changes to the tax treatment of employer-provided health care benefits including a cap on the tax exclusion that would not, in their view, disrupt the employer-based system that 175 million Americans rely on.  Chairman Kevin Brady (R-TX) emphasized that "the employer-sponsored health insurance market is a vital one," but also noted that the current tax exclusion "is unfair to those who don’t get their health insurance through their job," and "is a contributing factor in our country's stagnant wage growth."  However, ranking member Sander Levin (D-MI) said that eliminating or limiting the tax exclusion would "disrupt the employer-based health insurance system."   Avik Roy, a senior fellow at the Manhattan Institute and witness at the hearing, testified that the "best way to expand health insurance choices for individuals is to truly equalize the treatment of employer purchased and individually purchased coverage."  And Joe Antos, a Scholar at the American Enterprise Institute, told members "capping the exclusion is a sensible compromise that would be both simpler and fairer than the current system, and could be accomplished without disrupting the way most people purchase health insurance."  HR Policy CEO Dan Yager submitted a statement strongly urging policymakers "to carefully consider any changes to the tax treatment of employer-sponsored health benefits that may adversely impact employees and employers.  Providing tax credits for purchasing individual coverage should not come at the expense of those who receive health care through their employer."  Mr. Yager also called on Congress to repeal the ACA's Cadillac Tax.  The hearing was the first public forum for House Republicans as they begin to develop their plan to replace the Affordable Care Act.