Medicare and Medicaid spending has increased due to the rising number of people who are eligible to enroll in these programs. The options listed in the Congressional budget publication to reduce the deficit are designed to reduce the amount spent on health programs or raise the amount of taxes collected cover the cost and balance the budget.
Option 18 listed in the Congressional budget publication suggested implementing a reduced tax preference for employment-based Health Insurance. Currently, employer and employee payments for each employee's health insurance offered by the employer are excluded from payroll and income tax deductions. This will continue with the new excise tax that will start in 2020 which will curtail open-ended tax exclusions like contributions to HRAs, HSAs, and FSAs. This excise will still give employment health insurance plans a large tax subsidy.
There are many routes the federal government could take to modifying the current law concerning tax exclusions. The exclusions could be adjusted depending on a person's annual income amount or based on each taxpayer's demographics, like age, sex, or job. The exclusions could be kept but with a limit that applies to all taxpayers. Another option would to be to replace the exclusions with a tax credit. Taxpayers would have a set amount deducted each pay period and annual receive a credit for the excess that exceed the amount of federal income tax that they owe. Reduction of the tax preferences could affect health care spending by decreasing the amount spend compared to the total spent under the current system. Scaling back the current deduction preference would provide a diminished incentive to employers and employees buy expensive health coverage and increase demand for plans that cost less but require more out of pocket expense from individuals covered under the plan. The result would be a reduction in the utilization of health care resources but decrease the people’s health overall due to inability to pay more out of pocket for routine health care.
Baton Rouge Clinic is a large health care facility that services the local community by offering a comprehensive range of outpatient services directed towards the entire family from pediatrics through geriatrics. Ancillary services are also offered such as Radiology, Lab, and electrocardiogram. Due to the large range of services offered to patients, the clinic is very sensitive to any changes in the health care climate. For the employees of Baton Rouge Clinic, this option would shift more of the financial burden of carrying the employer offered insurance plan to the employee’s resulting in fewer enrollments during the open enrollment period. This would create less funds available the group plan and drive away healthy employees who would look for a cheaper option. From a business aspect of the clinic, this option would force patients to pay more out of pocket to keep the same coverage that they currently have causing them to use less health care services due to the expense.
References
NHE-Fact-Sheet. (2018, December 06). Retrieved January 14, 2019, from https://www.cms.gov/research-statis.../nationalhealthexpenddata/nhe-fact-sheet.html
Options for Reducing the Deficit: 2017 to 2026. (2016, December 8). Retrieved January 14, 2019, from https://www.cbo.gov/publication/52142
The Baton Rouge Clinic | It All Starts Here | Established 1946. (n.d.). Retrieved January 14, 2019, from https://batonrougeclinic.com/
Option 18 listed in the Congressional budget publication suggested implementing a reduced tax preference for employment-based Health Insurance. Currently, employer and employee payments for each employee's health insurance offered by the employer are excluded from payroll and income tax deductions. This will continue with the new excise tax that will start in 2020 which will curtail open-ended tax exclusions like contributions to HRAs, HSAs, and FSAs. This excise will still give employment health insurance plans a large tax subsidy.
There are many routes the federal government could take to modifying the current law concerning tax exclusions. The exclusions could be adjusted depending on a person's annual income amount or based on each taxpayer's demographics, like age, sex, or job. The exclusions could be kept but with a limit that applies to all taxpayers. Another option would to be to replace the exclusions with a tax credit. Taxpayers would have a set amount deducted each pay period and annual receive a credit for the excess that exceed the amount of federal income tax that they owe. Reduction of the tax preferences could affect health care spending by decreasing the amount spend compared to the total spent under the current system. Scaling back the current deduction preference would provide a diminished incentive to employers and employees buy expensive health coverage and increase demand for plans that cost less but require more out of pocket expense from individuals covered under the plan. The result would be a reduction in the utilization of health care resources but decrease the people’s health overall due to inability to pay more out of pocket for routine health care.
Baton Rouge Clinic is a large health care facility that services the local community by offering a comprehensive range of outpatient services directed towards the entire family from pediatrics through geriatrics. Ancillary services are also offered such as Radiology, Lab, and electrocardiogram. Due to the large range of services offered to patients, the clinic is very sensitive to any changes in the health care climate. For the employees of Baton Rouge Clinic, this option would shift more of the financial burden of carrying the employer offered insurance plan to the employee’s resulting in fewer enrollments during the open enrollment period. This would create less funds available the group plan and drive away healthy employees who would look for a cheaper option. From a business aspect of the clinic, this option would force patients to pay more out of pocket to keep the same coverage that they currently have causing them to use less health care services due to the expense.
References
NHE-Fact-Sheet. (2018, December 06). Retrieved January 14, 2019, from https://www.cms.gov/research-statis.../nationalhealthexpenddata/nhe-fact-sheet.html
Options for Reducing the Deficit: 2017 to 2026. (2016, December 8). Retrieved January 14, 2019, from https://www.cbo.gov/publication/52142
The Baton Rouge Clinic | It All Starts Here | Established 1946. (n.d.). Retrieved January 14, 2019, from https://batonrougeclinic.com/