Employer and business groups are shifting their lobbying efforts to fighting GOP proposals to chip away at the tax break on employer-provided health insurance to pay for the replacement healthcare law. Capping the tax break, they say, would cause employers to offer skimpier benefits, and some would stop offering coverage altogether. That would erode the employer-sponsored health insurance market.
If employers drop health benefits, the employer-sponsored market that provides coverage to 178 million Americans could lose its stability, opponents of the cap say. Today, employer-provided insurance receives the single largest federal tax break, estimated at more than $250 billion in 2016, according to the Congressional Budget Office.
The dumbest reasons for cutting the employer tax deduction was the same reason the GOP loves high deductible plans:
As it stands, the unlimited subsidy gives consumers less reason to care about the cost of healthcare.
Because Americans don't already know how expensive health care is? At least now we'll all get bigger pay checks?
House Speaker Paul Ryan argued the unlimited tax break holds down workers' wages and unfairly benefits the wealthy ... (it) limits the tax break to the 90th percentile of current group health insurance premiums. Benefits above that threshold would be taxed. Employers aren't about to trade the Cadillac tax for a cap on the tax break.