Taxation of Health Benefits Not a Viable Solution

Bipartisan cooperation is often hard to come by in Washington, but some ideas are so bad that both Republicans and Democrats can agree to work together to oppose them. Such is the case with taxation of employee health benefits.

Recently, I joined Rep. Joe Courtney (D-Conn.) and 160 other members of Congress from both parties in sending a letter to the deficit reduction Super Committee urging them to oppose new taxes on employer-sponsored health benefits. The last time I collaborated with Rep. Courtney was in a friendly wager over the OU match-up with Connecticut in last year's Fiesta Bowl. That collaboration turned out well -- especially for the Sooners -- but the stakes are much higher this time.

Millions of Americans depend on employer-sponsored health coverage for their health care needs. Since World War II, this coverage has been exempt from taxation, making medical care more accessible and affordable for the millions of American families who receive health insurance through their employer. Recent studies indicate that 61 percent of non-elderly Americans are covered by insurance through their workplace.

The consequences of imposing taxes on these benefits would be far-reaching and deeply disruptive. Many employers would be forced to drop coverage, plunging almost 160 million people into uncertainty. Health care costs would most likely increase dramatically. Employer-provided coverage achieves savings from economies of scale that disappear when coverage is purchased on an individual basis. Older workers would be hit hardest because their coverage costs more. Even in companies that managed to continue to provide benefits, costs would rise -- particularly for businesses with older workforces. Coverage is 7 percent more expensive in firms where the average employee age is 45 or older, according to studies. Small businesses and high-risk fields would also be among the hardest hit.

There is one other troubling effect that should not be overlooked. Many workers who would lose their employer-provided coverage if taxes are imposed would become eligible for Obamacare -- thus expanding government-sponsored health care even further. In fact, some proponents of health benefits taxation may even be basing their support on their desire to bring us one step closer to a European-style, single-payer system.

The cumulative effect of all these increased costs would minimize or entirely negate any potential revenue gains. The deficit reduction Super Committee faces many challenges, and a variety of tough policies must be implemented in order to restore fiscal sanity to Washington. However, taxing employer-sponsored health benefits is not an effective solution to the debt crisis.