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Impact of Federal Funding Letter

Impact of Federal Funding Letter

Dear Editor, Members, and Peers,

RE: Reduce Tax Preferences for Employment-Based Health Insurance


The federal government’s tax system favors employment-based health insurance, leading to buying health insurance through the employer. The employment-based health insurance excludes health insurance from payroll taxes and income. In most instances, the amount deducted by the employer to pay for the health insurance premiums is excluded from payroll taxes and income. Reducing tax preference has been recommended as part of a strategy to reduce federal debt. The proposal includes changing tax exclusions in employer-based health insurance by phasing out and capping tax exclusion, introducing a tax credit, removing tax exclusion, and forming a standard health insurance tax deduction.

Reducing tax preferences for employment-based health insurance is relevant for Ciox Healthcare because the organization accepts healthcare insurance as a payment option for patient services. Therefore, issues that affect healthcare insurance and the patient’s ability to pay for healthcare services impact the organization’s operations due to the changes in demand for healthcare services. Ciox Healthcare also collaborates with employers in implementing the employment-based health insurance program by providing an employee’s billing records, thus making it easier to calculate insurance payments. Employers may also recommend different employment-based health insurance based on an employee’s frequency of illness and the billing records offered by Ciox Healthcare.

Why I Am Writing to the Professional Organization

I am writing this letter to encourage the organization to support my suggestion to reduce tax preferences for employment-based health insurance to encourage employees to embrace health insurance as compensation. According to Cogan et al. (2011), taking compensation as health insurance has two impacts. One of them is increasing insurance coverage, especially the coverage offered by employers. The second impact is altering the type and quantity of health insurance that people choose, thus increasing health spending. Cogan et al. (2011) also argue that tax preferences significantly increase the demand for healthcare services by reducing the price of healthcare services relative to other services and producers.

The tax preference also encourages people to direct their spending on health services through insurance instead of spending out of pocket. This may create a tax bias that favors purchasing health insurance and selecting health plans with lower coinsurance and deductible rates. The outcome is often an increase in spending due to the moral hazard related to health insurance. Therefore, Ciox Healthcare needs to understand why it should support the reduction of tax preferences for employment-based health insurance based on its impact on healthcare spending since the organization relies on healthcare spending to generate revenue.

Impact on Ciox Healthcare

Ciox Healthcare is a company that specializes in information management by offering services such as retrieving medical records and healthcare information management. The organization helps insurance companies retrieve billing records to settle the insured’s healthcare bill based on the terms of the insurance package. Reducing tax preferences for employment-based health insurance will significantly increase healthcare spending. According to Pauly (2009), healthcare spending increases after decreasing tax preferences for employment-based insurance because employees are encouraged to prioritize healthcare over other goods and services. The reductions also encourage employers to compensate their employees through health insurance. Therefore, there will be an increase in the demand for healthcare information and the retrieval of a patient’s medical records, thus increasing Ciox Healthcare’s customer base. The organization may consider creating a long-term contract with employers for easy retrieval of a patient’s medical records to determine if their treatment is covered in the healthcare insurance package because some insurance covers do not include payment for treatments such as cancer treatment due to the high cost of treatment.

Summary of Proposed Changes to the Organization

According to Cylus et al. (2016), reducing tax preference for employment-based health insurance may create inefficiencies in the United States healthcare system. One of the impacts of healthcare inefficiency is denying patients who have received treatment access to health gain because they do not get the best quality of care within the resource boundaries in the health system. The second impact is the consumption of excess resources, thus denying other patients who could have accessed treatment a chance to get quality healthcare services. Therefore, Ciox Healthcare will make some operational changes to reduce the impact of inefficiencies. One of the adjustments will be using contracts to sustain the collaboration with employers offering employment-based health insurance. This will ensure that they receive billing information on time so that a patient is not denied health services due to failure to make payments on time.

The second adjustment will be using consent forms to get consent from the employees to share relevant medical information with the employer offering employment-based insurance. This will reduce complications that may occur when the employer refuses to pay for the healthcare services provided to an employee because they are not covered in the employer-based health insurance terms. The organization will also create a framework for determining whether limited resources are used to provide the right mix of healthcare outputs based on the preferences of employers offering employment-based health insurance. Another change will be creating a package for employer-based healthcare insurance providers to customize healthcare information based on the information requested by the employer to facilitate effective health insurance compensation and computation of premiums.


Cogan, J., Hubbard, R. G., & Kessler, D. (2011). The effect of tax preferences on health spending.

Cylus, J., Papanicolas, I., & Smith, P. (2016). A framework for thinking about health system efficiency. In Health system efficiency: How to make measurement matter for policy and management.

Pauly, M. V. (2009). Limiting the tax exclusion for employment-based health insurance: Are improved equity and efficiency enough? National Tax Journal, 62(3), 555-562.


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Understanding public funding is an important aspect when managing operations for a healthcare organization. Your ability to analyze how state and federal healthcare policies and funding affect healthcare organizations and consumers is crucial to its success in the marketplace. As a manager, especially one involved with overseeing operations, you will need to understand and apply this information regularly.

Impact of Federal Funding Letter

Impact of Federal Funding Letter

Select a healthcare organization with which you work or are familiar. (CIOX HEALTHCARE CAN BE USED AGAIN)

Download the report “Options for Reducing the Deficit: 2017 to 2026” from the Congressional Budget Office website.

Read Ch. 5 of the report.

Select one of the health options listed.

Assume you are the chief operating officer responsible for managing all operations of your selected healthcare organization.

You recently received an email from the Congressional Budget Office detailing the impact of the proposed options for reducing the federal deficit. You are directed to the document from the website: Options for Reducing the Deficit: 2017 to 2026.

After reviewing the Health Care Options in Chapter 5, you determine that one of the options will have a major impact on your organization.

You have decided to write a LETTER to the editor of your professional association to reach its membership. Your purpose in sharing your opinion is to influence others in the industry and provide useful information for those in similar situations facing challenges from regulatory changes that will impact their operations.


Write a 750- to 1,000-word letter to the editor of a professional organization for its website, written for distribution to its membership, which includes your peers.

Include the following in your letter:

A summary of your chosen specific option and why it is relevant for your organization
Why you are writing to this specific professional organization
The impact of your selected option on your facility and similar facility types
A summary of the proposed changes you intend to make to your organization or service that may help to decrease the negative impact that this proposed rule will likely have.

Cite 3 reputable references to support your assignment (e.g., trade or industry publications, government or agency websites, scholarly works, or other sources of similar quality).

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