Obama Must Tax Employer Health Insurance

To pay for new system, he must tax old 'crazy' one: Reich
By Kevin Spak,  Newser Staff
Posted May 26, 2009 12:25 PM CDT
This May 18, 2008 file photo shows Robert Reich, Labor Secretary during the Clinton administration, giving his commencement speech at California State University.   (AP Photo/California State University, Fullerton, Kelly Lacefield)
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(Newser) – During the campaign, Barack Obama was scathing about John McCain’s plan to tax employer-provided health benefits. But Obama’s going to have to bite the bullet and tax them himself if he wants to pay for his own health care initiative, writes Robert Reich in Salon. Now that Congress has killed Obama’s original plan to raise funds by cutting tax deductions for the rich, it’s the only way to generate enough revenue.

Tax-free, employer-provided insurance basically is the current government-backed health-care system. “But, face it, it’s become a crazy system,” Reich argues. Essentially, the government will only help you if you’re employed, and it’ll completely subsidize even the most gold-plated executive health package. Obama could pay for universal health care just by taxing health care for employees making, say, more than $100,000. That seems sane, and politically feasible. (Read more health insurance stories.)