Don't scrap Obamacare's tax on 'Cadillac' plans

(Bloomberg View) — Everyone likes having health insurance. Nobody likes paying new taxes. So the growing campaign against Obamacare’s tax on expensive health plans was to be expected. But this tax deals with a root problem in the U.S. health care system, and it would be better to fix its eminently fixable flaws than to kill it outright.

The tax is meant to address a critical weakness in the way Americans pay for their health insurance: The coverage they get from their employers—unlike salaries and other forms of compensation—is not subject to income or payroll taxes. This exemption is wildly expensive, costing the federal government $151 billion this year, more than any other tax expenditure. It’s also regressive: The top 10 percent of earners get 30 times the financial benefits as the bottom 10 percent, because they’re in higher tax brackets and they tend to have costlier health plans.