Health Policy - New York State

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November 18, 2004


John Fembup

" would instantly bump the tax obligations of employers that provide coverage..."

You seem quite sure that the employers' expenditures for health benefits will remain the same. What makes you think so?


Quite the opposite. I don't think exployers' health benefits expenditures would remain the same. They would fall and probably dramatically, though not instantaneously.

However, most employers would be pressured to increase salaries and wages to offset the lost benefits to employees and to allow them to pay for coverage themselves. High leverage employees would probably be able to insist on cash compensation increases greater than the lost health benefit because they would be paying higher taxes on the increased cash. However, my guess is that most employees won't have that leverage.

All of this assumes, of course, that this change takes place in a vacuum, which it most assuredly would not. Presumably there would be other offsetting changes.


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