Sen. Josh Hawley, R-Missouri, thinks he has a new idea: no taxes on health care. He has proposed making all out-of-pocket health care expenses tax deductible, saying that would ” help people immediately.” But would it?
Right now, there are already significant tax breaks on health care. The largest is the exemption of employer-sponsored health insurance from income taxes.
That exemption didn’t arise because the government wanted to help people pay for health care. It was an accident. During World War II, wages were capped by the government, but health benefits were not. Many employers, seeking to compensate their workers more, began offering health benefits to get around the price control. After the war, when the price control was removed, the practice was so widespread it stuck.
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