The national tax system offers preferential treatment for health insurance that individuals purchase through their employer. The payments of employers for health insurance are compensation forms. Nonetheless, unlike cash compensation, employers' payments are not liable for payroll or income taxes. Commonly, the total money that employees pay for their health insurance premium share is always barred from payroll and income taxes, which costs the federal government a massive amount of money. Nevertheless, the funding offered by tax preferences facilitates health organizations to offer employment-based health insurance. Besides, it also motivates employees to sign up in such insurance. Employment-based health insurance is a comparatively, effective method of providing coverage. But, cutting down tax preferences for employment-based health insurance will influence health care costs, the number of uninsured individuals, and both employers and employees in a hospital setting.
Tax replacement with a boundary on the existing tax excepting would lessen spending on the health comparative to what will happen under existing law. The tax preferences give health insurers an option to cover a significant range of services, including expensive services (Cordes, 2005). Also, people who are enrolled in this insurance plan pay less amount of money for the services they receive. Thus, the cut tax will tremendously level down those tax preferences to some extent. The increase of tax would then commence, applying to a significant portion of employment-based plans than the cut tax will under existing law (Cordes, 2005). This will give employers and employees less motivation to purchase health insurance, which will reduce escalating stress on both the cost and usage of health care services while supporting significant utilization of cost-effective forms of care. The impact of health care costs would be substantial in areas with advanced health care costs in hospitals.
Delegate your assignment to our experts and they will do the rest.
Reduced tax preference would cause fewer employers to provide health insurance, which will, in turn, increase the number of uninsured employees in hospitals. Many employees whose employers ceased to offer health insurance would buy insurance from the individual market, such as health insurance exchanges (Fontaine et al., 2011). The national financial support accessible through the exchange would offer numerous low-income individuals a reasonable option to employment-based coverage. On the other hand, the punishment of the tax for lacking insurance would provide numerous high-income individuals that are not under employment-based coverage an option to purchase insurance in the exchanges, even minus financial support. However, some employees whose employers clogged presenting health insurance under this incentive would relinquish coverage.
The move would also amplify the financial weight of several individuals with significant health issues. Notably, some employees and employers would avert the new taxes by moving to incentives that have low premiums and high-cost sharing needs. Workers in an organization with a less healthy staff or the one that function in a region with averagely health care costs would experience the increase of their tax liability (Etats-Unis, 2016). In higher-cost areas, the rise of an individual's liability would pressure hospitals to decrease or reduce unnecessary care. Besides, since the option to increase the reduced tax would not change the threshold for the age of employees, organizations would be likely to encounter the tax if it is comprised of older staff.
In summary, reducing tax partialities for employment-based health insurance would influence hospitals in several ways. First, tax replacement with a boundary on the existing tax eliminations would lessen spending on the health comparative to what will happen under existing law. Besides, abridged tax preference would result in fewer employers to provide health insurance, which will, in turn, augment the number of uninsured employees in hospitals. Lastly, the move would also expand the financial weight on some individuals with significant health issues.
References
Cordes, J. J. (2005). The encyclopedia of taxation & tax policy . Washington, D.C: Urban Institute Press.
Etats-Unis. (2016). Options for reducing the deficit: 2017 to 2026 . Washington: Government printing office.
Fontaine, P., Gullo, T., Harvey, H., Bradley, T., Crawley, K., Hearne, J., ... & Papenfuss, S. (2011, March). Reducing the deficit: Spending and revenue options. CONGRESSIONAL BUDGET OFFICE (US CONGRESS) WASHINGTON DC.
