(1) Current law confers a tax benefit for health 
insurance provided as an employee fringe benefit, 
but no similar tax benefit for health insurance pur-
chased by individuals. Similarly, current law confers 
a tax benefit on third-party payment of medical ex-
penses, but no similar tax benefit for most individ-
uals’ direct payment of medical expenses. This has 
effectively promoted employer-provided third party 
payment systems and effectively discouraged direct 
doctor-patient relationships. 
(2) The current tax treatment of medical ex-
penses has significantly curtailed competition for 
both health insurance and health care services gen-
erally. This has effectively increased the cost of 
health care and health insurance, which in turn has 
exposed people to greater health risks and made it 
more likely that individuals will go without needed 
care. 
(3) The current tax treatment of medical ex-
penses has restricted the freedom of individuals to 
exercise direct control over their health care dollars. 
The exclusion from gross income for employer-pro-
vided health care plans with no corresponding tax 
benefit for health insurance and health care obtained 
by individuals (except the self-employed) constitutes 
VerDate Nov 24 2008 
02:47 Jan 16, 2009
Jkt 079200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H502.IH
H502
rfrederick on PROD1PC67 with BILLS
a strong preferment for health care provided 
through employers’ group plans as compared to 
health care that individuals purchase for themselves. 
This is why 90 percent of Americans under age 65 
with private health insurance receive it through their 
employer. 
(4) Providing a tax benefit for employer-pro-
vided plans, but not for individually purchased 
health care, discriminates against individuals who 
work for companies that do not provide health bene-
fits, individuals who are temporarily employed, and 
the disabled. 
(5) In many cases, employers are not able to 
offer their employees a variety of health insurance 
plans. The Tax Code’s provision of benefits for 
mostly employer-provided health insurance has dis-
criminated against individuals who work for these 
employers, especially small businesses. This is why 
90 percent of American businesses that provide 
health insurance offer employees the ‘‘choice’’ of 
only one health care plan. Americans who work for 
businesses with fewer than 25 employees are half as 
likely to have health coverage as those working for 
companies with 1,000 or more employees. 
VerDate Nov 24 2008 
02:47 Jan 16, 2009
Jkt 079200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H502.IH
H502
rfrederick on PROD1PC67 with BILLS
(6) The Tax Code’s preferment of employer- 
provided group plans has triggered a marketplace 
response reflected in the significant increases in 
large group health care delivery, and the creation of 
a few health care conglomerates in lieu of thousands 
of competitive providers of medical services and 
health insurance. This has increasingly placed med-
ical decisions in the hands of health care bureauc-
racies, and significantly eroded the doctor-patient re-
lationship. Medical decisions should be returned to 
doctors and their patients. This will result in higher 
quality treatment and more patient protection. 
(7) Consumers should have the freedom to pur-
chase the health insurance of their choice, to choose 
their own doctors, and to make their own decisions 
about their health care. 
(8) By putting the medical choices made by in-
dividuals on an equal footing with the medical 
choices made for them by their employers and third 
parties, the Tax Code can encourage greater choice 
and competition, thereby reducing the cost of nec-
essary insurance for all Americans. This will enable 
millions more Americans to obtain needed health 
coverage, to make their own choices about which 
VerDate Nov 24 2008 
02:47 Jan 16, 2009
Jkt 079200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6201
E:\BILLS\H502.IH
H502
rfrederick on PROD1PC67 with BILLS
doctors to see, and to have access to the quality care 
they deserve and expect. 
SEC. 3. TAX DEDUCTIBILITY OF MEDICAL EXPENSES FOR 
INDIVIDUALS. 
(a) IN GENERAL.—Section 213(a) of the Internal 
Revenue Code of 1986 (relating to the treatment of med-
ical and dental expenses) is amended to read as follows: 
‘‘(a) ALLOWANCE OF DEDUCTION.—There shall be 
allowed as a deduction the expenses paid during the tax-
able year, not compensated for by insurance or otherwise, 
for medical care of the taxpayer, the taxpayer’s spouse, 
or a dependent (as defined in section 152, determined 
without regard to subsections (b)(1), (b)(2), and (d)(1)(B) 
thereof).’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to taxable years beginning after 
the calendar year which includes the date of the enactment 
of this Act. 
Æ 
VerDate Nov 24 2008 
02:47 Jan 16, 2009
Jkt 079200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6301
E:\BILLS\H502.IH
H502
rfrederick on PROD1PC67 with BILLS