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Tax Treatment of Health Insurance: A Primer

Friday, December 05, 2008

The United States tax system subsidizes the purchase of employer-sponsored health insurance for more than 160 million non-elderly people at a “cost” of approximately $200 billion a year. This tax subsidy is a major reason why most Americans have health insurance coverage through either their own employer or that of a family member. In recent months, the tax treatment of health insurance has gained a lot of attention – both during the presidential campaign and in health reform debates in Congress.

What is the current tax treatment of employer-sponsored health insurance? How does the tax treatment of health insurance impact employers? How does it impact employees? Do some workers benefit more than others from the current tax subsidies? Does altering the tax treatment of health insurance have the potential to expand or diminish coverage? Will cost containment efforts lead policy makers to consider altering the tax treatment of health insurance?

To address these and related questions, the Alliance for Health Reform and the Kaiser Family Foundation sponsored a December 5 briefing. Panelists were: Larry Levitt, Kaiser Family Foundation and Robert Lyke, Congressional Research Service. Ed Howard of the Alliance moderated.


 Ed Howard, Alliance for Health Reform, Moderator
 Larry Levitt, Kaiser Family Foundation, Speaker
 Robert Lyke, Congressional Research Service, Speaker
(Click on the camera icon to see a video of the speaker's presentation.)

Transcript, Event Summary and/or Webcast and Podcast

Transcript: Tax Treatment of Health Insurance: A Primer (Adobe Acrobat PDF), 12/5/2008
Event Summary: Tax Treatment of Health Insurance: A Primer (Word Document), 12/5/2008
Full Webcast/Podcast: Tax Treatment of Health Insurance: A Primer

The transcript, full webcast and podcast for this briefing, as well as videos of individual speakers' presentations, are provided by Kaiser Family Foundation.

Speaker Presentations

Larry Levitt Presentation (PowerPoint), 12/5/2008
Robert Lyke Presentation (PowerPoint), 12/5/2008

(If you want to download one or more slides from these presentations, contact us at info@allhealth or click here for instructions.)

Source Materials

The Tax Expenditure for Health: Update for 2007 (PowerPoint), The Lewin Group, 4/29/2008
Tax Benefits for Health Insurance and Expenses: Overview of Current Law and Legislation (Adobe Acrobat PDF), Congressional Research Service, 4/28/2008
The Tax Exclusion for Employer-Provided Health Insurance: Policy Issues Regarding the Repeal (Adobe Acrobat PDF), Congressional Research Service, 11/21/2008
Sourcelist (Adobe Acrobat PDF), , 12/5/2008
Speaker Biographies (Adobe Acrobat PDF), , 12/5/2008
Tax Treatment of Health Insurance: A Primer (Word Document), , 12/5/2008

Offsite Materials (briefing documents saved on other websites)

Employer Health Benefits: 2008 Summary of Findings (Adobe Acrobat PDF),Kaiser Family Foundation, 9/24/2008
Health Reform Through Tax Reform: A Primer, Health Affairs, 6/1/2008
Tax Subsidies for Health Insurance, Kaiser Family Foundation, 7/11/2008
Health Insurance and Taxes: Can Changing the Tax Treatment of Health Insurance, Employee Benefit Research Institute, 9/15/2007
Tax Expenditures and Employee Benefits: Estimates from the FY 2009 Budget (Adobe Acrobat PDF),Employee Benefit Research Institute, 2/15/2008
Health Care: How does the employer-sponsored insurance exclusion affect coverage?, Tax Policy Center, 4/9/2008
Health Coverage Tax Credits: A Small Program Offering Large Policy Lessons, The Urban Institute, 2/15/2008
How the government currently helps people buy health insurance: The employee tax break on job (Adobe Acrobat PDF),American Medical Association, 1/7/2008
The Importance of the Current Tax Treatment of employer-Sponsored Health Coverage for Employees (Adobe Acrobat PDF),National Business Group on Health, 7/31/2008
Tax Expenditures for Health Care, Senate Finance Committee, 7/30/2008
Statement by Katherine Baicker, Senate Finance Committee, 7/31/2008
Call to Action: Health Reform 2009, Senate Finance Committee, 11/12/2008
Using Section 125 Premium-Only Plans to Expand Health Coverage (Adobe Acrobat PDF),Mathematica Policy Research, 10/9/2008
Statement of Roger Feldman, House Committee on Ways and Means, 9/23/2008


Larry Levitt of the Kaiser Family Foundation explains how the tax system subsidizes health care in two ways. (20 minutes) From the Dec. 5 briefing cosponsored by the foundation.


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