Tax Deductible Employer Health Insurance (controlling demand)

My simple policy proposal is to eliminate the tax deductibility of employer provided health insurance.


Health insurance became deductible during World War II after the imposition of wage and price controls. A tax break is a subsidy. Subsidizing health insurance subsidizes healthcare.

Remember the effect of the right-shifting demand curve from another tab?

Increasing demand increases prices, other things being equal.

If employers are no longer incentivized by tax deductibility to provide health insurance to their employees, then employees would have less incentive to lock themselves into employer-provided immobile policies that cannot follow them from job to job and from state to state. Consumers would be free to shop a nationwide market for products that meet their lifetime healthcare needs.