Health care reform is moving back onto center stage, and mostly for good reasons. While the U.S. system can, under the right circumstances, deliver the finest care in the world, rising costs, unstable insurance arrangements, burdensome paperwork, and bureaucratic processes have left virtually no one happy with the status quo. It is particularly troublesome to many that nearly 9 million children lack stable insurance coverage. Experts from all points on the political spectrum believe reform is necessary to provide stronger incentives for cost control, stabilized and expanded insurance coverage children and their families, and improvements in quality of care across-the-board.
Two of the most innovative healthcare reform initiatives in a decade seek to address many of those flaws, starting, perhaps counter-intuitively, with tax policy. Many Americans might wonder, “”What do taxes have to do with healthcare?”” Everything, it turns out. This paper outlines why federal tax policy is the most important reason we have an employer-based health insurance system, for good and ill, and addressing the system’s shortcomings cannot be done well without reworking — or, as Massachusetts has done, working around — the federal tax laws that have led to today’s system in the first place.