The Times' lead article, "Even the Insured Feel the Strain of Health Costs" (May 4), perpetuates the myth that employers are largely paying for their workers' health insurance. This benefit is actually part of a worker's overall compensation package, but if the employer writes the check, it doesn't show up as taxable income to the employee (courtesy of Section 106 of the Internal Revenue Code).
Workers are paying their health costs now, either directly through their share of premiums, deductibles, or copayments, or indirectly as compensations diverted to this benefit rather than to cash wages.
The invisibility of this part of workers' compensation packages and the hidden tax break they get to shield health insurance from income and payroll taxes cause many distortions in our health sector, including upward pressure on spending. If the tax break followed people directly, they would have more say over how this part of their pay package is being spent, and they would force the system to be more responsive to their demands for greater value and economy in their health spending and insurance coverage.
Galen Institute, a health and tax policy research organization