The Congressional Budget Office recently released its updated economic forecast, and according to The Wall Street Journal, the report suggests corporate profits could be increased by employers dropping their health plans for workers.
In the economic forecast, the CBO slightly lowered its estimate of the number of individuals with employer-sponsored coverage. Due to the interaction between health insurance, which is untaxed, and taxable wage compensation, which is expected to remain about the same, the CBO suggested employers dropping workers' health plans could increase corporate profits, according to Chris Jacobs, policy director of America Next, a conservative think tank, and author of the WSJ report.
"Less employment-based coverage means that nontaxable compensation in the form of health benefits provided by employers will be less and taxable compensation in the form of wages and salaries will be greater, as total compensation is expected to remain roughly the same. And to the extent that wages and salaries do not increase as much as payments for health benefits are reduced, corporate profits — which are also taxable — would increase. Therefore, the decrease in the estimate of employment-based coverage implies higher federal revenues than projected previously," the CBO stated in the economic forecast.
The CBO's suggestion could have a negative effect on the arguments made by supporters of health reform because "nonpartisan analysts are suggesting that corporations may use Obamacare to fatten their own bottom line," according to the report.
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