Unfortunately, like the Republican Study Committee’s American Health Care Reform Act, Jindal’s proposal replaces the current exclusion of employer-based tax benefits with a standard tax deduction. Although he does not quantify the dollar amount, he proposes that it increase with inflation.
A standard deduction for health benefits has problems similar to the current exclusion of employer-based benefits from taxable income:
- It is regressive, giving more tax relief the higher your income tax bracket;
- It is not helpful to the half of the population that does not pay income tax (and thereby exacerbating demand for Medicaid).