By NextBestFitPremiums are a large, flat, hidden tax on wages
A family premium averages $26,993 (2025), the same whether the worker earns $50,000 or $500,000. Employers pay most of it out of compensation that would otherwise be wages.
Evidence
- Family premium $26,993; worker share $6,850.Sources: KFF (2025)
Who's affected
Who is hurt
- Low- and middle-income households: A flat premium takes a large share of a modest paycheck.
- Employers: Small employers pay the same premiums on lower payrolls.
Who gains while it lasts
- High earners: A flat premium is a small share of high pay.
- Health insurers, brokers, and their shareholders: Premiums are insurers' revenue.
Under your mix of paths
Paths that fix or soften it
Using your saved plan. 0 paths picked.Edit all picks
Root causes
- Per-person pricing of coverage
- Tax exclusion that favors richer plans
Related costs
Open questions
- Should health care be financed by income-based taxes, payroll taxes, per-person premiums, or a mix?
Solution paths (2)
Open a path for what it fixes, what it creates or worsens, who gains and who loses, precedents, and how it connects to other paths. See all paths as a decision tree.
Premiums (a flat amount per worker) are replaced with taxes based on income, so lower earners pay less and higher earners pay more.
- +Premiums are a large, flat, hidden tax on wages
- −Faces political, industry, or legal opposition
- −Replacing premiums with taxes
Premiums are set as a percentage of income (like German payroll contributions) instead of a flat amount.
- +Premiums are a large, flat, hidden tax on wages
- +Losing the choice of health plan and insurer competition
- −Replacing premiums with taxes
- −Adds paperwork, coordination, or complexity
- −Employer health taxes can lower wages at firms that never offered coverage
Also addressed by paths for other problems
Single public payer for everyoneTens of millions of people have no coverageChosen
Premiums end. The money moves into taxes instead (see Replacing premiums with taxes).