The tax exclusion for employer-provided health insurance would be repealed for most taxpayers. That amount could then be offset by whatever tax credit the employee chooses. The tax deduction for Medical Savings Accounts would be eliminated. The fixed credit gives everyone equal and sizable assistance in purchasing their health insurance. At the same time, a credit which is available to all taxpayers retains equitable tax relief for the higher-income families most affected by the loss of the exclusion.
Individuals can easily assign their credit to either their employer or insurer.
By making tax relief for health care more explicit and obvious, everyone will be encouraged to seek the best value for their health care dollar. The sliding-scale percentage credit targets additional tax relief to those individuals needing more help because they face higher than average health insurance costs or medical expenses. It provides increased assistance to those whose total health care expenditures consume a greater proportion of their income. Furthermore, by providing greater tax relief to those in poorer health, this credit reduces some of the demand for problematic insurance market reforms.