Conservatives rediscover their dislike of ESI

Mark Warshawsky and Andrew Biggs have a fairly standard conservative take on employer sponsored health insurance, combined with a new twist–noting that stagnant wages and faster rising premiums from 1999 onward have increased inequality, because higher paid workers get more tax free income via employer sponsored health insurance than do low paid ones.

I totally agree with this, and they make what used to be the standard conservative arguments about the desirability of altering the tax treatment of employer sponsored insurance, morphed into a way to talk about it viz the language of inequality. However, this produces a political problem for conservatives, because the ACA actually does something about the tax treatment of ESI for the first time, via the so-called Cadillac Tax that is a de facto capping of a heretofore unlimited tax subsidy that disproportionately benefits high wage workers (as Warshawsky and Biggs note).

The most surprising aspect of my debate with Jim Capretta on the ACA a few weeks back was him seeming to forget that Conservatives have long talked about altering the tax treatment of ESI (he didn’t really forget, he just hasn’t shifted gears yet as the WSJ piece has, but he will). The Dems actually did something about the tax treatment of the ESI (some of them didn’t realize they did or have) an aspect that conservatives should have cheered if they were thinking in policy terms (if you take seriously what they said for the 30 years prior to the passage of the ACA).

The piece by Warshawsky and Biggs is part of conservatives preparing to re-embrace actual health policy positions after the 2014 election, and not merely whatever attack maximizes chances for the next election. That is good news.

If you listen carefully….

About Don Taylor
Professor of Public Policy at Duke University (with appointments in Business, Nursing, Community and Family Medicine, and the Duke Clinical Research Institute). I am one of the founding faculty of the Margolis Center for Health Policy, and currently serve as Chair of Duke's University Priorities Committee (UPC). My research focuses on improving care for persons who are dying, and I am co-PI of a CMMI award in Community Based Palliative Care. I teach both undergrads and grad students at Duke. On twitter @donaldhtaylorjr

2 Responses to Conservatives rediscover their dislike of ESI

  1. Bob Hertz says:

    The basic conservative proposition is this: if employer health insurance was taxable, then far more Americans would have skimpy policies. This would make them sensitive to prices, and in short order the price of health care would start to fall.

    It is worth noting that millions of Americans in the small business and self-employed sector have had skimpy policies for the last 20 years ( such as me). And we have been very price-sensitive, thank you.
    However we have had no effect on health care prices in general, probably because we have been a minority of consumers.
    The conservative position is not wrong — my complaint is that they make the process seem too benign. A lot of people with skimpy policies suffer at least once in this process — when they have a minor procedure and get a bill for $5,000 — which is very hard to fight, and sometimes ruins their credit in the process. When Eliz Rosenthal publishes an article on price gouging, the NY Times gets a thousand responses in about one day.
    In addition, people with large medical debts will often postpone further care, or just not go back to their regular provider out of embarassment.
    My contention for years is that price regulation as done in most other nations is a less painful way of bringing about low prices.

  2. Pingback: About last night… » Balloon Juice

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