Healthcare benefits and logic of universal care

In a recent post, the Center for Budget and Policy Priorities advocates for taxing health benefits to pay for universal health care.  Actually, they call it "Limiting the Tax Exclusion for Employer-Sponsored Insurance" (say what you will about Frank Luntz, when he does his verbal misdirection at least it's pithy).  It think this is a lousy idea which from what I can tell is now out the picture.  It did however clarify some issues around health care reform.

The idea for taxing the benefits is that you would tax benefits for the better compensated workers who are getting the biggest tax break because of their relative marginal tax rates.  The problem is that from what I can tell, these are the people for whom the health care plans were set up and everyone else is just along for the ride.

Most insurers require groups the insure to have at least 75% of eligible members participate.  The reason for this is that they don't want to get just this sick people.  To get people to participate, the sponsor (usually the employer) subsidizes the premiums so that young, healthy employees don't opt out.  Also, they encourage workers with low marginal tax rate to participate (a group who gets less of a tax subsidy and would notice the cost more).  Basically, sponsors are going through a great deal of effort and cost to provide a benefit for a slice of their workforce which a) they value, b) needs health care and c) does get a benefit from the tax exclusion.  In other words, when the insurers are limited on who they can exclude, they want everyone in the pool.  The company realizes the value of the benefit to employees who need/want it  (employees who have families/kids or older workers who have health needs associated with aging) and who they tend to value (older, better compensated workers e.g,, managers or technical specialists and long-term employees) and drags everyone else in to make sure they can give the benefit to the people to whom they want to give it.

This in essence is the argument for universal care writ small.  Everyone needs health care, but it gets unavoidable from the time you have kids to the time you die.  For the poor and the young, the marginal cost exceeds the benefit compared with other goods, but the business logic for the payor is that if you exclude them from the pool, the average cost goes through the roof.