Lots of headlines about  taxing a portion of  job-related health benefits to finance health care. Even though President Obama has not been enthusiastic, it's definitely still on that great big table on which Max Baucus has spread out his vast buffet of options.

The Center on Budget and Policy Priorities reminded us several times this year that the tax exclusion for employer-sponsored health insurance is regressive (giving more benefits to more affluent people than to lower income workers). And it's also a big pot of money. Here are the key points from the latest CBPP paper by Paul N. Van de Water (emphasis ours):

• Congress is unlikely to be able to finance health reform legislation that includes universal coverage unless it limits the exclusion of employers' health insurance payments from workers' income and payroll taxes.
• The nation's costliest tax subsidy, the employer exclusion, is not focused on those who most need help affording coverage, and it contributes to greater health care spending. It was worth $246 billion in 2007—$145 billion in income taxes and $101 billion in payroll taxes.
• Limiting the exclusion can provide a significant source of financing for health reform without eroding employer-sponsored health insurance or causing other undesirable effects—if both the limit and the rest of the legislation are well designed.
• For example, the limit can be adjusted to reflect the age of a firm's workforce and regional variations in health care costs, so that people are not disadvantaged because of where they live or work. A limit also can readily be designed so no type of family or household is disproportionately affected. (Note from us: these adjustments can smooth over some of the big political obstacles to tapping the exclusion).
• The limit also should cover other types of health benefits that employees may receive as tax-exempt compensation, such as flexible spending accounts, premium conversion, health reimbursement arrangements, and health savings accounts. Otherwise, employers and employees could circumvent the limit to some degree.

President Obama opposed scrapping the tax exclusion during the campaign—but please remember, he opposed it in a very different context. John McCain wanted to scrap the tax break as part of an overhaul that would NOT cover everyone and would gut the already spotty consumer protections and state regulation of insurance...We're in a different world now.