The Tax Consequences of Fixing Surprise Medical Billing are Slight

Abstract

A selling point of recent attempts to end the incidence of "surprise" medial billing arising from the inadvertent use of out-of-network providers has been that it would increase tax revenue by reducing insurance costs, which would serve to boost (taxable) wage income. However, that increase in income for employees is offset by an equivalent decrease in taxable income for providers, who are in a higher tax bracket. The offsetting tax revenue loss may completely offset any ancillary tax gains, we submit.