There are some things that Republicans and Democrats agree on. Bipartisan support for health reform is on the rise, and the employer-based system that’s been in place since World War II is going to look very different very soon. It’s coming not a minute too soon; average costs paid by employers for health insurance premiums have risen eight times faster than average income in the United States, according to the Robert Wood Johnson Foundation.

But, as always, the devil’s in the details, and legislators have a lot of work to do to iron them out.

According to The New York Times, three House committee chairmen, George Miller, Henry A. Waxman, and Charles B. Rangel, all Democrats, are working on a piece of legislation starting with the premise that most employers should help finance health coverage and that the government should offer a public plan as an alternative to private insurance. Their goal is to have a single bill to put before the full membership before the August recess.

Employer groups expect early drafts of the bill to include proposals to tax employee health benefits, which have been exempt for both employers and employees. The tax exemption is a huge target for enhancing federal coffers; the government estimates that it will cost over $170 billion in lost tax revenue this year.

There’s a lot of speculation about how this change would actually shape up, and benefits experts expect to see different versions of the proposal. In one version, employer contributions wouldn’t be taxed but health care benefits would be added to employee compensation, which would be taxed for the first time in history and subject to federal, state, and Social Security taxes.

According to a Workforce report, Republicans have also proposed eliminating the tax exclusion but would add a provision extending a tax credit to people who buy insurance.

The Employee Benefit Research Institute (EBRI) says that the change would be hardest on self-insured employers that would be required to set the premium equivalent for each worker, which could open a whole Pandora’s box of problems revolving around fairness and tax issues for workers. ###