David S. Gamage, Perverse Incentives Arising from the Tax Provisions of Healthcare Reform: Why Further Reforms Are Needed to Prevent Avoidable Costs to Low- and Moderate-Income Workers, 65 Tax. L. Rev. 669 (2012)
This Article proceeds as follows. Part II explains why employers provided health insurance prior to the ACA, and Part III explains how the ACA will alter employers' incentives as to whether to offer health insurance. Understanding how the ACA will affect employers' incentives is key to understanding the ACA's effective taxes. Parts II and III are directed toward readers who have not previously immersed themselves in the details of the ACA.'s Readers who already have an in-depth understanding of the tax provisions of the ACA may wish to start reading with Part IV.
Part IV explains how the ACA will create effective taxes imposing costs on low- and moderate-income workers, and Part V concludes by explaining how these effective taxes could be mitigated or avoided by reforming the tax benefits available for employer-sponsored health insurance. This Article ends with a call for action. The ACA is an impressive accomplishment, but further reform is urgently needed to prevent the ACA from imposing unnecessary costs on low- and moderate-income workers beginning in 2014. If the federal government fails to act, then this Article exhorts state governments to pass legislation to mitigate the ACA's effective taxes.
In short, this Article reports preliminary analysis that I plan to develop further in future work. Because the ACA's new framework for regulating health care finance is scheduled to come into effect in 2014, I have concluded that it is important to make this preliminary analysis available now, rather than waiting until it is fully complete.