This is not a very impressive paper. One might have expected better from the Parliamentary Budget Office, given that people who make law are relying on it.
The paper estimates $3.8 billion of savings for the federal government by eliminating free employer-paid health benefits.
In coming at its estimate, the PBO seems to consider only one potentially small negative effect of changing tax status: couples each of whom has an employer-paid plan may eliminate one. (See the Appendix on “Methodology” at p. 18.)
But tax expenditures, such as this one, always have distorting economic effects. Their whole point is that they change economic behaviour. If you eliminate the benefit, there must be at least equivalent economic cost. (Another premise of tax expenditures is that the economic benefit exceeds the tax cost. So, one might infer that the economic impact of eliminating the benefit would exceed the tax savings.)
With the heightened cost once the plans are taxable benefits, many employers may cancel their plans. The Canadian Life and Health Insurers Association evidently fears that. (Have a look at its 24 May 2018 response here.)
If there are fewer plans, one might expect lower insurance plan sales revenue and reduced taxable income of insurers and their commission sales agents.
Many employees may opt out of the plans or employers may reduce their coverage. That could mean fewer prescriptions and reductions in dental care. Those changes would also have economic impacts, including tax effects.
This was a small study. Even so, one might have expected to see more discussion of the limitations of the findings and more prominent suggestions for ways to make the study’s conclusions more accurate.