A new study examines the potential effects of eliminating or reducing the tax deductibility of employer-provided health benefits.
There has been a lot going on that promises to impact employer-provided health benefits either immediately or at some point in the future.
What if…there was a cap on the deductibility of employer-provided health benefits?
In recent years, there has been a fair amount of chatter about eliminating or reducing the tax deductibility of employer-provided health benefits. The Urban Institute and the Robert Wood Johnson Foundation provide some data on one of these “what-if” scenarios, focusing on the impact of a cap on tax deductible benefits at the 75th percentile of costs of premiums and other medical benefits.
This tax change would eliminate 7% of current tax subsidies. From a revenue perspective, this move would increase federal tax revenue by $264 billion over ten years (2014 to 2023). During the first year, this cap would increase taxes for 15.7% of tax filers in 2014, rising to 20% by 2023. Individuals working for public sector employers would be impacted more than private sector employees. In the private sector, employees in financial services, real estate and professional services industries would see the greatest impact.
More hospital pricing data to come
The Medicare charge data recently released by the federal government has already created a wave of awareness about the wide variation in the cost of different services and procedures. Interestingly, four of the five hospitals with the highest charges are not located in major cities but in Bayonne, N.J., Upland, Pa., and Fairfield and Modesto, Calif. The fifth hospital is in Philadelphia.
In many ways, the fact that this data is out in the public domain to be studied and talked about is more important than the actual amounts reported. As more of this type of information gets out (and there is a sense that this is just the beginning), the more chance there is for market forces to do their work.
The U.S. Department of Health and Human Services is also funding data centers to collect, analyze and publish health pricing and medical claims reimbursement data. Others are getting into the act too. Earlier this year, trade group American Health Insurance Plans released data showcasing the range of charges by physicians for out-of-network care that showed similarly diverse charges.
The federal data is available in Excel and CSV formats.
Consumer-directed health plans not just for the young.
Since they were introduced, it was unclear whether high-deductible consumer-directed health plans (CDHPs) would appeal to older workers who tend to have higher utilization of health care services. Research using seven years of CDHP enrollment data conducted by the Employee Benefit Research Institute (EBRI) has found that, although employees using CDHPs tend to be healthier, they are not necessarily younger.
In most years, the data shows that employees enrolled in these plans are actually less likely to be between ages 21 and 34, more likely to be between ages 35-44 and just as likely to be ages 45-54. However, the study also found that these enrollees do tend to be in better health and have higher incomes and more education than those who enroll in more traditional HMO and PPO plans.