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1 1 (June 2016)

handle is hein.amenin/aeiabrp0001 and id is 1 raw text is: A II0OIIIIII 0 .z TheCogitie Dssoanc o Tax~~ Tramn f elhCr ByToa .Mle Jun 206 ouse Republicans are delivering the outlines of a replace plan for Obamacare this week. Changes in how tax policy treats health care spending should be a key element. However, recent congressional hearings and ear ly previ ews of t heir forthcoming proposal have left the future trajectory of their likely recommendations unclear, if not contradictory, and prone to stalling out before reaching escape velocity.1 Don't expect to hear anything new, bold, or transformational. The usual mix of incremental proposals promises only modest trims at the upper end of tax subsidies for health insurance. They frame transition issues in terms of how to avoid uncomfortable change as long as possible rather than to achieve it more feasibly. Subsidies outside of the traditional employer-based system are treated as generic, lump-sum handouts, with only modest adjustments for varying needs or costs of care facing different types of individuals. One's income, health risk, or location would not affect the amount of those tax credits. The new insurance subsidies are limited to individuals who are not already offered coverage from their employers. They arewalled off from the existing ones through the employer-sponsored insurance (ESI) tax exclusion. Apart from halfheartedly trying to cap consumer demand for more health insurance and health care at the most excessive margins, there is little effort to explain how reducing subsidies might actually lower overall costs, make health care more efficient, and improve health. Of course, these all involvewell-meaning efforts. Bless their hearts, but pray for their heads. Almost everyone in politics has a notion for how they might want to change tax policy for health care. But they just can't seem to settle on what, AMERICAN ENTERPRISE INSTITUTE

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