Taxing employer-provided coverage

Lester Feder, writing over at Slate’s The Big Money section, might as well be writing in response to my post from yesterday.  He asks why unions have not supported some form of taxing employer provided healthcare to provide health insurance to poor workers, i.e. those people for who unions should protect.  Feder’s conclusion: unions’ workers generally possess health insurance, and they fear that taxing employer benefits will eventually collapse the system of employer-provided healthcare (one of organized labor’s proudest achievements). 

Assuming that providing health insurance to non-unionized workers decreases the incentive to unionize, I also suspect that unions perceive little benefit in extending insurance.  (Likewise, Wal-Mart may support extensive health care reform if they believe it will decrease the impetus for unionization.)  But as Feder points out, and recent talk from D.C.  has emphasized, taxing employer-provided benefits is not a binary proposition: a single person earning a lot of money could pay taxes on his/her insurance while an autoworker supporting a family would not.   Feder again:

This is what solidarity really means—we use our strength to make all workers stronger because that makes us all better off. [...]That is why I helped organize our members to support a living-wage law to protect service workers who did not have the union strength to win fair pay through collective bargaining.

And that is why better-off workers who don’t genuinely need the tax break to afford coverage should be willing to give up a portion of the employer exclusion to subsidize care for the uninsured

Though a system of taxes on everyone receiving employer-provided health insurance could raise $250 billion per year, we could still raise significant revenue from taxing generous plans or high earners.  (Though, as I said earlier, the tax base at some point has to be broadened.)  Couple a more modest exclusion with an income surtax (but why not just increase the top income tax rate?) and savings through structural reform (salaried doctors, health record digitization, higher primary care pay, Medical Advisory Council, &c), and you’re at or beyond a fundable solution.