President Obama and Congress are currently attempting to sort out details large and small about what type of health care reform we may see, and how we will pay for it. No whehter we  see a robust “public option,” fully private insurance, or any variants in between, universal health coverage for all Americans remains a primary goal. All sides agree that this will cost much money, even if reigning in health care costs over the long term proves feasible.

As detailed by the New York Times, several ideas of how to pay are battling it out. They include:

  • Limiting income tax deductions for high income individuals;
  • Taxing a portion of health care benefits received by employees;
  • Spending less on Medicair; and
  • Expanding “sin” taxes on purchases like liquor and cigarettes.

The second option – taxing health benefits – has gained ground with some influential Senators, including Max Baucus, Chairman of the Senate Finance Committee. It would affect small businesses that offer (or wish to offer) health benefits to their employees.

Proponents of funding healthcare reform through benefits taxation see it as a potential source of large revenue that could be put toward universal coverage. They also argue that taxing more expensive plans would target the higher earning employees who normally receive more robust benefits plans.

Opponents claim taxing overpriced health coverage would simply punish employees. Further, they argue it could cause even fewer employers to offer health care benefits to their employees (though, of course, employers may be facing some strong persuasion to offer coverage).

Needless to say, small businesses and their employees will be watching for details of any revamped health care system, and for how it will be funded.

  • White House Not Ruling Out Health Benefits Tax (US News & World Report)
  • Fact Check: The Truth Behind Obama’s Health Care Plan (ABC News)
  • Small businesses wary of health care legislation (USA Today)
  • Health Insurance Overview (FindLaw)
  • Choosing the Right Health Plan for Your Employees (FindLaw)

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