Page 2

Bill Section Provision Effective 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-04

Other income and payroll tax effects relating
to excise tax on excess health plan
expenses of employers, deduction for
health plan premium expenses of
individuals, and other changes in private

health insurance... 1/1/96 - 2.8 5.1 5.2 5.7 61 5.6 5.5 5.5 5.7 47.3

GRAND TOTALS. (62) +29 9.4 9.5 -10.1 -105 -#23 -140 -142 -14.1 -97.0

Joint Committee on Taxation

NOTE: Details may not add to totals due to rounding.

Legend for "Effective" column: eia = expenses incurred after
ma/styea = months after in taxable years ending after
tyba = taxable years beginning after
tbdHCSC = to be determined by Health Care Standards Commission

(1) Revenue estimates in this table were prepared under the assumption that accountable health plans contain the same benefits as the standard benefit plan in the
Health Security Act (H.R. 3600, S. 1757, and S. 1775).

(2) If this provision were deleted from the bill, the revenue loss would be significantly greater than $0.7 billion because a larger share of employer-sponsored health
insurance would be paid by employers and thereby excluded fram income and payroll taxation.

(8) Gain of less than $50 million,

(4) Section 1002 would allow the self-employed to claim a deduction for their health insurance expenses, subject to the limits described in the text. Section 1003 would provide the
same deduction to all individuals, including the self-employed. This line shows the revenue loss attributable to deductions that would be claimed by all individuals, including the
self-employed. The omission of Section 1002 from the bill would have no revenue effect, because the self-employed would remain eligible for the deduction under Section 1003
If Sections 1002 and 1003 were deleted from the bill, the revenue gain would be somewhat less than $164.7 billion because households would claim larger itemized deductions
for health insurance premiums and a larger share of premiums would be paid by employers (which would result in the exclusion of a larger portion of employee
compensation from income and payroll taxation).

(5) This provision is not included in S. 1579.

(6) Loss of less than $10 million.

(7) Loss of less than $50 million.

(8) Gain of less than $1 million.


3

with HPPCs to facilitate the purchase of health coverage by
employees through the HPPC. Small employers would be required to
provide certain information to the HPPC with respect to those
employees who purchase insurance through the HPPC, to deduct from
employees’ compensation the premium due, and to forward such
amount to the HPPC. Small employers could, but would not be
required to, pay for a portion of the cost of health care
coverage for their employees. Failure on the part of a small
employer to have a HPPC agreement in effect or to comply with the
agreement would result in a civil penalty not to exceed $500 for
each day in which the violation continues.

Large employers would be required to make health care
coverage available to employees through one or more AHPs but
would not be permitted to do this through a HPPC. Large
employers could, but would not be required to, pay for a portion
of the cost of coverage for its employees. Large employers would
be required, at the request of an employee, to deduct the cost of
health care coverage under an AHP from employees’ compensation
and forward the premiums to the AHP. Failure on the part of a
large employer to offer coverage under an AHP or provide for
payroll deduction of premiums at the employee’s request would
result in a civil penalty not to exceed $500 for each day in
which the violation continues.

D. Accountable Health Plans (AHPs)

The bill would not require health plans or providers to
meet any specific requirements. However, the bill would
encourage providers and insurers to provide coverage through AHPs
by conditioning certain tax incentives on the purchase of health
care through an AHP. AHPs could be either "open" or "closed".

In general, a closed AHP would be an AHP that is limited by
structure or law to one or more large employers. An open plan
would be a plan that is not closed.

To qualify as an AHP, a plan would be required to meet
quality standards to be established by the Commission, to offer a
uniform set of benefits to be established under the bill, to
establish standard premiums for the uniform set of benefits, and
to make adjustments in cost-sharing in the case of low-income
individuals. An AHP could offer benefits in addition to the
uniform set of benefits, but only if the additional benefits were
offered and priced separately from the uniform benefits.

In offering the uniform set of benefits, an AHP could not
discriminate with respect to enrollment or benefits based on an
individual’s health status, claims experience, receipt of health
care, medical history, receipt of public subsidy, or any
characteristic that may relate to the need for health care
services. An AHP would be allowed to exclude coverage with
respect to a pre-existing condition for no more than six months



8

II. ESTIMATED REVENUE EFFECTS OF TAX PROVISIONS IN
THE MANAGED COMPETITION ACT (H.R. 3222 AND S. 1579)

The following tables show the estimated revenue effects of
the various tax provisions in the Managed Competition Act for
fiscal years 1995 through 2004. These revenue estimates were
prepared by the staff of the Joint Committee on Taxation (Joint
Committee staff) in cooperation with the Congressional Budget
Office (CBO) as it prepared estimates of the outlay effects of
the bill.

The major provisions of H.R. 3222 and S. 1579 would
generally become effective on January 1, 1995. However, for
purposes of estimation of the revenue and outlay effects of the
bill, CBO and the Joint Committee staff have assumed that all
effective dates would be postponed one year. Thus, the major
provisions are not assumed to become effective until January 1,
1996.

The Joint Committee staff normally does not provide revenue
estimates for fiscal years outside the standard five-year budget
window (fiscal years 1995 through 1999), but an exception has
been made for major health reform bills, for two reasons. First,
the full impact of some of the provisions in the bills may not be
apparent until the year 2000 or later. Second, the Congressional
Budget Office has prepared baseline macroeconomic forecasts and
baseline health expenditure forecasts through calendar year 2004
for the purpose of estimating the outlay effects of these bills.
These macroeconomic forecasts are a necessary input for revenue
estimation, and are not otherwise available for years outside the
five-year budget window.

The Managed Competition Act would create a Health Care
Standards Commission that would be responsible for determining
the standard package of health insurance benefits that would be
provided through accountable health plans (AHPs). Revenue and
outlay estimates for some of the major provisions in the bill are
very sensitive to the level of benefits provided through AHPs.
For estimation purposes, CBO and the Joint Committee staff have
made two alternative assumptions concerning AHP benefits. The
revenue estimates for Alternative 1 were prepared under the
assumption that AHPs would contain the same benefits as the
standard benefit plan in the Health Security Act (H.R. 3600,

S. 1757, S. 1775). The revenue estimates for Alternative 2 were
prepared under the assumption that AHPs would contain a reduced
benefits package that is 20 percent less expensive than the
Health Security Act’s standard benefit plan.

The Managed Competition Act would limit the favorable tax
treatment of employer-paid health insurance by imposing an excise
tax on excess health plan expenses of employers. Excess health



5

the amount paid does not exceed the reference premium rate for
the self-employed individual’s premium class. Under the bill as
drafted, no deduction would be allowed for the health insurance
expenses of self-employed individuals during 1994.

3. Deduction for health plan premium expenses of individuals

Individuals would be able to deduct from gross income the
cost of health insurance under an AHP up to the reference premium
rate for the individual’s premium class. Premiums that do not
qualify for this deduction would continue to be deductible as
under present law, i.e., subject to the 7.5-percent floor on
itemized medical deductions.

The provision would be effective for amounts paid after
December 31, 1994.

4. Exclusion of health care expenses from gross income

The bill would not change the present-law rule that
employer contributions to an accident or health plan are
excludable from an employee’s gross income. The bill would
extend this exclusion to partners and more than 2-percent
shareholders of S corporations by providing that such individuals
can exclude from gross income amounts paid by the partnership or
S corporation for health care coverage of the partner or
shareholder. Under present law, S corporation shareholders that
own 2 percent or less of the corporation are permitted to exclude
employer-provided health care from gross income.

The provision would apply to taxable years beginning after
December 31, 1994.

5. Other provisions

H.R. 3222 (but not S. 1579) would provide for a
liberalization of the rules governing when a health plan can
qualify for tax exemption as a voluntary employees’: beneficiary
association (VEBA). The liberalized rules would apply only to
health plans which are AHPs. H.R. 3222 would also provide fora
simplified annual reporting system for certain fully-insured
multiple employer welfare arrangements devoted solely to health
care. The bill also would repeal the health care continuation
rules for employers ("the COBRA rules"), generally effective on
January 1, 1995.

F. Treatment of Underserved Areas

The bill would provide special treatment to areas
designated by the Governor of the relevant State (with the
concurrence of the Commission) as underserved. Under the bill, a
HPPC serving an underserved area could require AHPs offered by


4
beginning on the first date of coverage under the plan.

AHPs would be required to charge a standard premium for the
uniform set of benefits within each HPPC in which the plan is
offered. The premium could vary only by premium class. The
Commission would establish premium classes based on four types of
enrollment (i.e., individual, individual and spouse, individual
and one child, individual and more than one family member) and
the age of the principal enrollee. Closed AHPs would be
permitted to set premiums based on type of enrollment only (i.e.,
closed AHPs could disregard the age adjustment).

As discussed below, premiums would be reduced for low-
income individuals.

E. Tax Incentives Relating to the Purchase of Health Plans
1. Excise tax on employers with excess health plan expenses

The bill would impose a deductible excise tax on employers
equal to 34 percent of their excess health plan expenses. For
this purpose, excess health plan expenses would include all
expenses for group health insurance except certain expenses
attributable to coverage under an AHP. Expenses attributable to
coverage under an AHP would also be excess health plan expenses
(1) if the employer’s contribution is not uniform for a premium
class regardless of which plan is selected by the individual, (2)
if, in the case of a small employer, the payment is not made
through a HPPC, and (3) to the extent the expense attributable to
any particular individual exceeds the reference premium rate
pertaining to that individual. The reference premium rate would
be the lowest premium offered by an open plan in the HPPC area to
individuals in the relevant premium class.

The excise tax would not apply to employer-provided health
care for Medicare-eligible retirees or to expenses for direct
services that are determined by the Commission to be primarily
aimed at workplace health care and health promotion or related
population-based preventive health activities.

The excise tax generally would be effective for expenses
incurred after December 31, 1994, with a delayed effective date
for expenses incurred pursuant to a collective bargaining
agreement.

2. Increase in deduction for health plan premium expenses of
self-employed individuals

On and after January 1, 1995, the bill would provide a
100-percent deduction for amounts paid by a self-employed
individual to a HPPC for health care coverage for the individual
and his or her spouse or dependents under an AHP, to the extent



7

premium for Part B of Medicare, and requiring certain agencies to
prefund government health benefits. The bill would also repeal
Medicaid.

I. Training and Education of Health Care Professionals

The bill would establish a National Medical Educational

Fund to be used by the Commission to provide financing for
certain medical residency training programs and physician
retraining programs. Each AHP would be required to make a
payment into the Fund of one percent of the gross premium
receipts of the AHP. The bill would authorize appropriations for
scholarship and loan repayment programs currently administered by
the National Health Service Corps and funding for other grants.

3. Paperwork Reduction and Administrative Simplification

The bill would require the Commission to address certain
issues relating to the use of health care information. Among
other things, the Commission would be required to set goals and
deadlines for the health care industry to take certain action
regarding paperwork reduction and availability of information. A
nondeductible penalty tax would be imposed on administrators of
health plans for any failure to comply with the Commission’s
requirements.

K. Miscellaneous

The bill also contains provisions relating to the
application of the antitrust laws to AHPs, preventive health and
individual responsibility under public health plans, and
malpractice reform.



OVERVIEW AND ESTIMATED REVENUE EFFECTS
OF THE MANAGED COMPETITION ACT OF 1993
(H.R. 3222 AND S. 1579)

Prepared by the Staff
of the
JOINT COMMITTEE ON TAXATION

May 6, 1994

JCX-7-94



10

If the excise tax were deleted from the bill, the revenue
losses would be significantly greater than the $0.7 billion shown
in Alternative 1 or the $65.5 billion shown in Alternative 2
because there would no longer be a disincentive for employers to
pay for supplemental insurance for employees. A larger share of
employer-sponsored health insurance would be paid by employers,
with corresponding adjustments in the cash wages of employees,
which would lead to reductions in income and payroll tax
revenues.

The Managed Competition Act would provide individual
taxpayers with a deduction from gross income for their
expenditures on accountable health plan premiums. The deduction
would be limited to the premium for the lowest-cost accountable
health plan in the individual’s Health Plan Purchasing
Cooperative area, less any amounts paid by the taxpayer’s
employer. In general, a more generous benefits package for AHPs
would result in larger individual tax deductions for AHP premiums
and a larger revenue loss from the deduction. If AHPs contained
the Health Security Act’s standard benefit package, the revenue
loss from the deduction would total about $165 billion over the
fiscal years 1996-2004 (Alternative 1). With a less generous
benefits package (Alternative 2), the estimated revenue loss from
the deduction would fall to about $86 billion.

If the deduction were deleted from the bill, the revenue
gain would be somewhat less than $165 billion (Alternative 1) or
$86 billion (Alternative 2), for two reasons. First, some
individuals would claim an itemized medical expense deduction for
their insurance premiums (as allowed under present law, subject
to a floor equal to 7.5 percent of adjusted gross income) .
Second, in the absence of the deduction, a larger number of
employers would be willing to contribute toward health insurance
for employees. These employers would make corresponding
adjustments in the cash wages of their employees, which would
lead to reductions in income and payroll tax revenues.



9

plan expenses would be defined as employer contributions that
exceed the premium for the lowest-cost accountable health plan in
the employer's Health Plan Purchasing Cooperative area. Since
all AHPs would provide the same package of benefits, the
variation in premiums for AHPs would likely be small. Thus, it
is assumed that employers could pay a large portion of the
premium for AHPs for their employees without incurring any excise
tax liability. However, employer contributions toward
supplemental health insurance (beyond the basic AHP) would
generally be subject to the excise tax on excess health plan
expenses. If AHPs contained a generous package of benefits
(comparable to the standard benefit plan in the Health Security
Act), then it is unlikely that many employers would provide
supplemental health insurance, and excise tax revenues would be
small (about $0.7 billion over the fiscal years 1996-2004), as
shown in Alternative 1.

With a less generous benefits package (Alternative 2), it
is likely that many employers would provide supplemental health
insurance. Premiums for supplemental insurance could. be paid by
employees (through wage withholding) or by employers. If
employers paid the premiums, there would most likely be a
corresponding adjustment in the cash wages of the employees
receiving the insurance. (Economists generally believe that all
of the costs of employer-paid fringe benefits, including taxes
imposed on employers, are borne by employees in the form of
reduced cash wages.) Employer-paid premiums would be subject to
the excise tax on excess health plan expenses, but employee-paid
premiums would be paid out of cash wages that had been subjected
to income and payroll taxation. In general, the excise tax would
be less of a burden than the income and payroll taxes on cash
wages, and it would be to the advantage of employees to have
premiums for supplemental insurance paid by employers. Thus,
with a less generous benefits package (Alternative 2), there
would be larger excess health plan expenses by employers, and
excise tax revenues would be much larger ($65.5 billion over
fiscal years 1996-2004).

Some employers who are now making generous contributions
toward health insurance for employees would reduce their
contributions by amounts sufficient to avoid the excise tax on
excess health plan expenses. These reductions would most likely
be accompanied by increases in cash wages and other fringe
benefits to maintain the same level of total employee
compensation. The increases in cash wages would generate
additional income and payroll tax revenues. These additional
revenues are included in the last lines of the two tables ("Other
tax effects..."), along with other tax effects of the bill. (The
other tax effects would include changes in tax-sheltered health
spending through cafeteria plans and changes in itemized medical
deductions.)



6

the HPPC to include the underserved area as part of their service
area. Special risk-adjustment factors could be used to increase
the compensation available to AHPs serving individuals in an
underserved area. The bill would authorize $5 million in
technical assistance funding for entities seeking to establish a
network plan in an underserved area for each fiscal year 1995
through 1999. The bill would authorize $75 million for each
fiscal year 1995 through 1999 for financial assistance with
respect to the development and implementation of AHPs in
underserved rural areas. The bill would authorize $11.5 million
for each fiscal year 1995 though 1999 for migrant health centers
and $88.5 million for each such fiscal year for community health
centers.

The bill would expand Medicare Part B coverage to include
certain services provided by rural emergency access care
hospitals. The bill would authorize $50 million for each fiscal
year 1995 through 1999 for transitional assistance to government-
owned or private nonprofit safety net hospitals. The bill would
establish a procedure whereby a State could identify an area as a
chronically underserved area and arrange for it to be served by a
single AHP.

G. Low-Income Assistance for Health Coverage

Low-income individuals could be eligible for some or all of
the following subsidies under the bill: (1) premium assistance;
(2) cost-sharing assistance; and (3) special assistance with
respect to certain items and services (including prescription
drugs, eyeglasses, and hearing aids). The types of subsidies
available for any particular low-income individual would depend
upon whether the individual is Medicare-eligible and whether the
individual has very low income (family income below the poverty
level) or moderately low income (family income below 200 percent
of the poverty level).

Premium assistance would be available to all low-income
individuals, whether Medicare-eligible or not. Cost-sharing
assistance would be available to all low-income individuals who
are not Medicare-eligible, and to very low-income individuals who
are Medicare-eligible. Special assistance with respect to
certain items and services would be available to all very low-
income individuals, whether Medicare-eligible or not.

The total amount available for low-income premium
assistance would be determined by the Commission for each year.

H. Medicare and Other Savings
The bill would make a number of changes relating to

Medicare, including reducing certain provider payments under
Medicare, requiring high-income individuals to pay an additional



2

I. OVERVIEW OF THE MANAGED COMPETITION ACT OF 1993
(H.R. 3222 AND S. 1579)

A. In General

The Managed Competition Act of 1993 (H.R. 3222/S. 1579,
"the bill") has as its stated goal "[t]o contain health care
costs and improve access to health care through accountable
health plans and managed competition." The bill would not
require individuals to purchase health insurance nor employers to
pay any portion of their employees’ health care costs. It would
require employers to provide employees the opportunity to acquire
health insurance--in the case of small employers by participating
in state-sponsored health plan purchasing cooperatives (HPPCs) .
The sponsors of the legislation contend that the availability of
HPPCs together with a number of tax incentives and disincentives
contained in the bill will increase price competition among
health plans and providers, thereby reducing prices and making
health care coverage available to more individuals. The bill
would provide health-care subsidies to low- income individuals
through premium and cost sharing assistance.

The bill would establish a Health Care Standards Commission
{the Commission") to implement various requirements under the
bill.

B. Health Plan Purchasing Cooperatives (HPPCs)

The bill would provide opportunities and incentives for
eligible individuals and small businesses to purchase health care
coverage through HPPCs. HPPCs would negotiate with accountable
health plans (AHPs); enroll individuals in AHPs, charge, receive,
and forward premiums; reconcile low-income assistance; coordinate
with other HPPCs; and establish a complaint process. Each State
would be required to establish HPPCs by July 1, 1994.

In general, all individuals other than full-time employees
of large employers could purchase coverage through a HPPC.?
Members of the same family would not be required to enroll in the
same AHP. Thus, members of the same family could enroll on an
individual basis in different AHPs offered by a HPPC.

Cc. Employer Obligations

Small employers would be required to enter into agreements

2§. 1579 calls the entity that would perform these duties the
National Health Care Board rather than the Commission.

3 A large employer generally would be one with more than 100
employees.



ALTERNATIVE 2:

ESTIMATED REVENUE EFFECTS OF TAX PROVISIONS IN THE
MANAGED COMPETITION ACT (H.R. 3222, S. 1579) (1)
(REDUCED BENEFITS PACKAGE]

Fiscal Years 1995-2004

[Billions of Dollars]
Bill Section Provision Effective 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-04

1001. Excise tax on excess health plan

expenses of employers (2)...... eia 12/31/95 ~- 3.2 49 6.5 7.3 7.9 8.41 8.5 9.2 10.1 65.5
1002.-- Deduction for health plan premium
1003. expenses of individuals (3)... 1/1/96 - -2.7 -6.9 7.8 -8.9 940 -10.7 -12.5 -13.1 -13.9 -85.9
1004. Exclusion from gross income for

contributions by partnership or S corpo-

tation to health plans for partners and

shareholders... tyba 12/31/95 - 0.4 0.4 -0.4 -0.5 -0.6 -0.6 -0.7 -0.8 -0.9 5.2
1006. Modify VEBA requirements to encourage :

group purchasing for large employers (4).. 1/1/95 (5) (6) (6) (6) 0.1 0.1 0.1 -0.1 0.1 0.1 -0.6
1601. Repeal of COBRA continuation

requirements. VW96 we eee eee terete eee Negligible revenue effect - - ------------------ 0772777777
2204. Increase in Medicare part B premium for

individuals with high income... .. Mastyea 12/31/95 7 0.6 1.2 1.5 1.9 24 3.4 4.0 5.1 6.5 26.2
6007. Excise tax penalty for failure to satisfy

certain health plan requirements..... tbdHCSC (7) (7) (7) (7) (7) (7) (7) (7) (7) (7) (7)



INTRODUCTION

This document,' prepared by the staff of the Joint
Committee on Taxation, provides an overview and estimated revenue
effects of H.R. 3222 and S. 1579, the "Managed Competition Act of
1993". H.R. 3222 was introduced by Mr. Cooper and others on
October 6, 1993; and S. 1579 was introduced by Sen. Breaux and
others on October 21, 1993.

Part I of the document is a brief overview of the bill; and
Part II shows the estimated revenue effects of the tax provisions
of the bill under two possible benefit packages.

' This document may be cited as follows: Joint Committee on
Taxation: i and Esti venue Eff. he

ition A H.R. 3222 an 57 (JCX-7-94), May 6,
1994,



INTENTS

INTRODUCTION . 2. 1 1 ee ee ee ee ee ee ee

I.

II.

OVERVIEW OF THE MANAGED COMPETITION ACT OF 1993
(H.R. 3222 AND S. 1579) .. 2... 2... 2 eee

ESTIMATED REVENUE EFFECTS OF TAX PROVISIONS IN
THE MANAGED COMPETITION ACT OF 1993
(H.R. 3222 AND S. 1579) .. . . 2... ee eee

e



ALTERNATIVE 1:

ESTIMATED REVENUE EFFECTS OF TAX PROVISIONS IN THE
MANAGED COMPETITION ACT (H.R. 3222, S. 1579) (1)

{HEALTH SECURITY ACT BENEFITS PACKAGE]

Fiscal Years 1995-2004

[Billions of Dollars]
Bill Section Provision Effective 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-04

1001. Excise tax on excess health plan

expenses of employers (2)..... gia 12/31/95 - (3) (3) 0.4 0.2 (3) (3) (3) (3) 13) 0.7
1002.-- Deduction for health plan premium
1003. expenses of individuals (4)..... 1/1/96 ~ $9 152 -161 -17.2 -183 -20.2 -226 -23.9 -25.3 -164.7
1004. Exclusion from gross income for

contributions by partnership or S corpo-

ration to heaith plans for partners and

shareholders... tyba 12/31/95 7 -0.4 -0.5 -0.5 -0.6 -0.6 -0.7 -0.8 -0.8 0.9 5.9
1006. Modify VEBA requirements to encourage

group purchasing for large employers (5).. 1/1/95 (6) (7) (7) (7) 0.1 0.1 01 0.4 0.1 0.1 -0.6
1601. Repeal of COBRA continuation

requirements... WN96 we eee ee eee eee nee Negligible revenue effect - -
2204. Increase in Medicare part B premium for

individuals with high incom ma/tyea 12/31/95 - 0.6 1.2 15 1.9 24 3.41 4.0 5.1 6.5 26.2
6007. Excise tax penalty for failure to satisfy

certain health plan requirements. tbdHCSC (8) (8) (8) (8) (8) (8) (8) (8) (8) (8) (8)



Page 2

Bill Section Provision Effective 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995-04

Other income and payroll tax effects relating
to excise tax on excess health plan
expenses of employers, deduction for
health plan premium expenses of
individuals, and other changes in private
health insurance:

1/1/96 7 46 6.8 7A 7.8 8.4 8.1 8.2 8.4 88 68.2

GRAND TOTALS.

(5) 5.3 5.6 6.9 7.5 8.6 7.9 74 87 10.5 68.2

Joint Committee on Taxation

NOTE: Details may not add to totals due to rounding.

Legend for "Effective" column: eia = expenses incurred after
ma/styea = months after in taxable years ending after
tyba = taxable years beginning after
tbdHCSC = to be determined by Health Care Standards Commission

(1) Revenue estimates in this table were prepared under the assumption that accountable health plans contain a benefits package that is 20 percent less expensive than
the standard benefit plan in the Health Security Act (H.R. 3600, S. 1757, and S. 1775).

(2) If this provision were deleted from the bill, the revenue loss would be greater than $65.5 billion because a larger share of employer-sponsored health
insurance would be paid by employers and thereby excluded from income and payroll taxation.

(3) Section 1002 would allow the self-employed to claim a deduction for their health insurance expenses, subject to the limits described in the text. Section 1003 would provide the
same deduction to all individuals, including the self-employed. This line shows the revenue loss attributable to deductions that would be claimed by all individuals, including the
self-employed. The omission of Section 1002 from the bill would have no revenue effect, because the self-employed would remain eligible for the deduction under Section 1003.
If Sections 1002 and 1003 were deleted from the bill, the revenue gain would be somewhat less than $85.9 billion because households would claim larger itemized deductions

for health insurance premiums and a larger share of premiums would be paid by employers (which would result in the exclusion of a larger portion of employee
compensation from income and payroll taxation).

(4) This provision is not included in S. 1579.
(5) Loss of less than $10 million.

(6) Loss of less than $50 million.

(7) Gain of less than $1 million.