Health reform created the opportunity to redirect tax incentives to promote greater equity, efficiency, and choice in insurance markets. The opportunity, however, has largely been lost. First, tax credits for insurance will be available only through new health insurance exchanges, not to workers with coverage through their employers, which discriminates against one group of low-income people over another based on where they work, not what they can afford. Second, the “Cadillac” tax on highcost insurance is intended to improve incentives for efficiency in the health system, but it is only a half step that also creates new inequities. Third, new taxes imposed on insurers and health suppliers will ultimately be paid by consumers, contrary to some claims. Finally, a new Medicare tax fails to stabilize the program’s financing and could have the perverse effect of delaying adoption of difficult policy actions needed to place Medicare on a sustainable fiscal path.