Democrats Signaling Overhaul of Health Care System Involves Taxing Existing Programs

President Obama has an extremely ambitious agenda to reworking every aspect of the US economy, particularly the health care field. His "solution" to the nonexistent problem of health care for all Americans involves imposing taxes on health care benefits that were previously non-taxable.

The Obama administration is signaling to Congress that the president could support taxing some employee health benefits, as several influential lawmakers and many economists favor, to help pay for overhauling the health care system.

The proposal is politically problematic for President Obama, however, since it is similar to one he denounced in the presidential campaign as “the largest middle-class tax increase in history.” Most Americans with insurance get it from their employers, and taxing workers for the benefit is opposed by union leaders and some businesses.

In television advertisements last fall, Mr. Obama criticized his Republican rival for the presidency, Senator John McCain of Arizona, for proposing to tax all employer-provided health benefits. The benefits have long been tax-free, regardless of how generous they are or how much an employee earns. The advertisements did not point out that Mr. McCain, in exchange, wanted to give all families a tax credit to subsidize the purchase of coverage.

At the time, even some Obama supporters said privately that he might come to regret his position if he won the election; in effect, they said, he was potentially giving up an important option to help finance his ambitious health care agenda to reduce medical costs and to expand coverage to the 46 million uninsured Americans. Now that Mr. Obama has begun the health debate, several advisers say that while he will not propose changing the tax-free status of employee health benefits, neither will he oppose it if Congress does so.

At a recent Congressional hearing, Senator Ron Wyden, an Oregon Democrat whose own health plan would make benefits taxable, asked Peter R. Orszag, the president’s budget director, about the issue. Mr. Orszag replied that it “most firmly should remain on the table.”

The purpose of taxing the benefits would mean that the costs for health care would rise, employers would no longer have the incentive to provide health care benefits to their employees, and the number of people who are forced to rely on government supplied health care options increases.

The Times points out that the benefits to employers grows the higher the income levels of the employee, ignoring the fact that the employer and employee benefit from this arrangement regardless of the income level. It's yet another not-quite-subtle class warfare argument.

Don Surber also weighs in.