To amend the Internal Revenue Code of 1986 to improve health care choice by providing for the tax deductibility of medical expenses by individuals.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Health Care Freedom of Choice Act''.

SEC. 2. FINDINGS.

    The Congress finds the following:
            (1) Current law confers a tax benefit for health insurance 
        provided as an employee fringe benefit, but no similar tax 
        benefit for health insurance purchased by individuals. 
        Similarly, current law confers a tax benefit on third-party 
        payment of medical expenses, but no similar tax benefit for 
        most individuals' 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 expenses has 
        significantly curtailed competition for both health insurance 
        and health care services generally. 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 expenses has 
        restricted the freedom of individuals to exercise direct 
        control over their health care dollars. The exclusion from 
        gross income for employer-provided health care plans with no 
        corresponding tax benefit for health insurance and health care 
        obtained by individuals (except the self-employed) constitutes 
        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-provided plans, 
        but not for individually purchased health care, discriminates 
        against individuals who work for companies that do not provide 
        health benefits, 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 discriminated 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.
            (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 medical 
        decisions in the hands of health care bureaucracies, and 
        significantly eroded the doctor-patient relationship. 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 purchase 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 individuals 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 
        necessary insurance for all Americans. This will enable 
        millions more Americans to obtain needed health coverage, to 
        make their own choices about which 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 medical 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 taxable 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.

Summary: Health Care Freedom of Choice Act - Amends the Internal Revenue Code to allow the tax deduction for medical expenses without the gross income percentage limitation.