Many economists are beginning to assume that wages actually might rise over time if lawmakers end up taxing the most expensive health plans offered by employers. The tax is the leading proposal in the Senate to pay for the expansion of health insurance coverage to the roughly 46 million Americans who are uninsured. It would apply to high-cost health plans offered by employers, which typically include health, vision and dental insurance, among other health-related benefits. The proposal would raise an estimated $201 billion over 10 years, according to the Joint Committee on Taxation (JCT). But it could raise a lot more beyond 10 years, since the thresholds would rise on a formula based on inflation, and health care costs increase far faster than inflation. Translation: As health care costs rise, more and more plans will exceed the threshold.
1 comment:
It would take a giant leap of faith for me to believe in such a prediction, for the following reasons:
1. Profit is the ultimate motivation in a capitalist economy. There is nothing that would stop firms from pocketing the savings. How many firms would say - "I cannot provide you with good health insurance, but I would like to give you a raise!" Unless of course, a firm wants to use higher wages as a signal, but ...
2. If higher wages could be used as a signal, why would an employer currently provide health insurance instead? This seems to indicate that it is hard to substitute health insurance with wages. If the tax limits an employer's ability to give health insurance, it is very likely that the lost benefit would go into some other kind of wage drift (like in Sweden) than higher wages.
So, it seems more likely that employees will have to bear the brunt of health care costs, and the government won't be able to find the money it needs.
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