"I continue to believe it would be the wrong way to go to eliminate the (tax) exclusion on health care benefits," President Obama said in a town hall forum broadcast from the White House.
Congress is currently considering a plan to cap the tax exclusion at a certain level rather than eliminate it all together. Still, the president said he remained opposed to that idea as well.
"I continue to believe that's not the best way to do it," he said. "Essentially, employers would stop providing health insurance."
Mr. Obama, as he did earlier at the town hall hosted by ABC, said he would prefer to fund reforms through capping the itemized deductions wealthy Americans can take on their taxes.
"There's going to have to be some compromise at the end of the day," he said.
Mr. Obama also made the case for a government-sponsored health insurance plan, or "public option." Sen. Chuck Grassley (R-Iowa), one of the key Republicans involved in health care reform, has said there could be no compromise over a public option; Republicans would not accept it.
"A lot of the objection I hear is not practical, it's ideological," Mr. Obama told the 146 citizens at the town hall. One of the most common objections to the public option is that it would drive private insurers out of business, leading to fewer choices for consumers.
"You'll always hear folks say the free market can do it better," Mr. Obama said. "If that's the case, nobody's going to choose the public option."
The president said there are ways to ensure private insurers are not driven out of business. For instance, he promoted the idea that those eligible for a solid employer-based plan could not switch to the public option.
He also said health care reform should include a "pay or play" provision, which would require employers to either offer decent plans or contribute funds to pay for the public option. The pay or play provision would act as a disincentive, the president said, for employers considering dropping their coverage.
"It's not fair for taxpayers to have to cover your employees, whether it's through a public plan or through the emergency room," he said.
While some argue the health care system should move away from employer-based coverage, Mr. Obama said the country could not move too drastically away from a system that has matured over decades.
"For us to completely change our system would be hugely disruptive," he said.
The Republican National Committee criticized the ABC town hall for leaving out the voices of Republican lawmakers, calling it an "infomercial" for the president's plan. Additionally, a group of 40 Republican congressmen signed a letter to ABC, sent by a new group called The Media Fairness Caucus, that said the town hall "gives the American people a slanted view" on the health care debate.