Lawmakers to supercommittee: Don’t tax employer-sponsored healthcare plans

Some 160 House members of both parties have signed onto a letter urging the deficit-cutting supercommittee to reject any proposals to tax employer-sponsored healthcare benefits.

The letter says the idea amounts to an unacceptable tax on the middle class that would imperil coverage for almost 160 million people and make the deficit worse, not better.

The two members who spearheaded the letter — Reps. Joe Courtney (D-Conn.) and Tom Cole (R-Okla.) — said during a press conference Friday that taxing health benefits would disproportionately harm people with high coverage costs, especially older Americans and those in high-risk professions.

"I hope the strong bipartisan expression of this letter will encourage the supercommittee not to go where they shouldn't go," Cole said.

Taxing employer-sponsored benefits is popular with many healthcare experts who think it could lower healthcare costs by reducing overuse of medical services because people would bear the brunt of those costs more fully. The two main deficit-reduction proposals — Domenici-Rivlin and Simpson-Bowles — both advocate capping, and then phasing out, the tax exemption.

In their sign-on letter, Courtney and Cole write that the tax would encourage employers to drop coverage, making more people eligible for federal insurance subsidies under the healthcare reform law. That would drive prices up, the letter argues, because employers can generate savings through economies of scale and care management plans.

"There are academics who believe that this is a good way to change the system," Courtney said. "They're not focusing on how this tax would actually be implemented and how premiums are actually calculated."