Tax Subsidies For Employment-Related Health Insurance: Estimates For 2006

Abstract

Employment-related health insurance is subsidized through exemptions from federal and state income taxes, as well as from taxes for Social Security and Medicare. Proposals to modify this subsidy are a perennial subject of policy debate. We present tax-subsidy projections from a new data resource constructed using a statistical linkage between the establishment and household components of the Medical Expenditure Panel Survey (MEPS). We project that the total federal and state tax subsidy in 2006 for employment-related coverage of active workers will exceed 200 billion dollars. We present per worker tax-subsidy estimates and an analysis of insurance incidence by establishment characteristics.