These proposals would make health insurance more affordable, reduce the number of uninsured and give people more control over their health care. New Options for Individuals. Federal tax policy encourages employers to provide health insurance instead of paying employees all their compensation in the form of taxable wages. The unemployed and those whose employers do not provide health insurance get virtually no tax break. Republican proposals would level the playing field, giving more equitable tax relief to people who purchase their own health insurance.
Deductions have some advantages.
For example, deductions tend to be uniform for all taxpayers and are harder for special interests to manipulate through subsequent legislation. Since the higher the cost, the higher the tax break, deductions provide more relief for people who live in high health care cost areas or who must pay high premiums because they are at higher risk of incurring medical expenses. However, deductions have their disadvantages. For example, a tax deduction benefits high-income people more than those with low incomes. A deduction for individual purchase would extend this pattern, giving the most tax relief to people who would likely purchase coverage anyway and the least relief to people who need help the most.