Monday, March 16, 2009

Obama Flip-Flops on Taxing Health Benefits

If you recall back to the presidential debates, you'll remember that Obama criticized McCain's health insurance plan--which was to end the tax-exempt status of employer-provided health insurance benefits. McCain's reasoning was that ending the special status for employer-provided benefits would help transition health insurance towards a more efficient, individually purchased system, much like car insurance and the like. Obama called it "one of the biggest middle class tax-hikes in history," etc.

Rather surprisingly, Obama has totally changed his mind about taxing health benefits. The New York Times reports:

In television advertisements last fall, Mr. Obama criticized his Republican rival for the presidency, Senator John McCain of Arizona, for proposing to tax all employer-provided health benefits. The benefits have long been tax-free, regardless of how generous they are or how much an employee earns. The advertisements did not point out that Mr. McCain, in exchange, wanted to give all families a tax credit to subsidize the purchase of coverage.

At the time, even some Obama supporters said privately that he might come to regret his position if he won the election; in effect, they said, he was potentially giving up an important option to help finance his ambitious health care agenda to reduce medical costs and to expand coverage to the 46 million uninsured Americans. Now that Mr. Obama has begun the health debate, several advisers say that while he will not propose changing the tax-free status of employee health benefits, neither will he oppose it if Congress does so.

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