Just as President Barack Obama got his health care reforminitiative started, a key point of controversy during his campaignagainst Sen. John McCain reared its ugly head–the notion thatemployer-paid coverage should no longer be tax-exempt. That's boundto create a political backlash with voters, and it might promptwider support for a single-payer system.

Stirring the pot was a March 12story in The Washington Post, headlined: "Workers' HealthBenefits Eyed for Taxation." While President Obama and Sen. McCainclashed during last fall's presidential campaign on this touchysubject, Republicans are not the only ones raising the possibilityof slaying this sacred cow.

As the Post reported, "in recent weeks…Sen. Max Baucus,D-Mont., chairman of the tax-writing Finance Committee, hasrepeatedly advocated changing tax laws to include employerbenefits…Meanwhile, 13 other senators–from both sides of theaisle–have signed on to a plan for universal coverage that includesa tax on employer-provided benefits."

President Obama, despite criticizing this idea during thecampaign as a major middle-class tax hike, "hasn't slammed the dooron it," noted the Post. In fact, White House BudgetDirector Peter Orszag said taxing employer benefits was amongseveral ideas that "most firmly should remain on the table," thePost reported.

"Some congressional Democrats say the White House has signaledthat [President] Obama would accept a tax on employer benefits aslong as he didn't have to propose it himself," the Postwrote.

While President Obama recently proposed setting aside $634billion over 10 years to help finance wider health insurance, wherehe might raise that kind of money is far from settled. The huge potof untaxed money spent by employers to cover workers is certainly atempting target.

I don't think the average American worker has any idea how hugean impact this titanic shift would be for them financially. Theblow might be cushioned for lower-income workers via the kind oftax credit proposed by Sen. McCain during his campaign, althoughthe figure he floated would not nearly cover the cost of most plansnow being offered.

This is the conundrum faced by anyone looking to cover the45-million-plus without health insurance: How do you pay for theircare without taking something away from those already insured?

Most who have coverage must still lay out thousands to pay theirportion of the premium, co-payments, deductibles and out-of-networkcharges. If told they must also pay income tax on the full premium,many will not be able to pony up. They will either have to acceptlesser coverage for a cheaper price, or drop their insurancealtogether–which would defeat the purpose of reform.

Despite all the tough talk reported in the Post, whenpush comes to shove, I cannot imagine Congress bravely marchinginto the political firestorm this radical idea will undoubtedlyspark.

When voters get wind of how much more will be coming out oftheir pockets to pay for coverage, and once they realize they mighthave to accept lesser benefits to assure affordability, most willbe furious. Will Congress have the guts to impose such a costlychange in policy–public reaction be damned? I doubt it.

Indeed, if voters are told they will have to pay a huge tax billto keep their health insurance coverage, might the stage not be setto simply expand the payroll deduction already in place forMedicare and create a universal, single-payer system? I would thinkso.

Sam Friedman is NU's Editor In Chief. Torespond to his column, e-mail [email protected], or go to hisblog at www.property-casualty.com.