Health Care Tax Cuts - FWD via Sonny

Tom Boland (
Mon, 13 Apr 1998 05:05:01 -0700 (PDT)

FWD via "H. C. Covington" <>

            Health Care Tax Cuts
            By E. J. Dionne Jr.

            Friday, April 10, 1998; Page A23, Washington Post

            Who spoke most recently of the need to ensure that "health
care is more available and affordable for millions of Americans,
especially working Americans who are uninsured"?

            It wasn't President Clinton repackaging his health plan, nor
was it Sen. Edward M. Kennedy, who has been trying to pass national
health insurance for three decades. The new health care warrior is Rep.
Bill Archer (R-Tex.), the solidly conservative chairman of the House
Ways and Means Committee. He wrote about health care in a letter to his
colleagues last week inviting their "ideas and input."

            If Bill Archer says it's urgent to expand health coverage,
nobody can say that the problems of the uninsured are an invention of
advocates of big government programs. The problem is real and growing.

            But before Archer is driven to distraction by comparisons
with Ted Kennedy, it must be noted that he's pushing only one approach
to the problem: "health care tax cuts." What's Archer up to? He speaks
for many Republicans in Congress who care about two things: passing tax
cuts and appearing to address popular issues without proposing new

            Marry these two concerns, and you get creative packaging
Every issue becomes a reason for a tax cut. This being the week of the
Masters golf tournament, some legislator may announce a plan to expand
middle-class access to elite country clubs with new tax breaks for
greens fees and dues.

            Archer makes clear in his letter to colleagues that tax cuts
are indeed at the top of his mind. He's preparing for any tobacco
settlement that pours new money into federal coffers. The big tobacco
companies may have declared the settlement dead on Wednesday, but many
legislators think a deal -- or at least new tobacco taxes -- will
materialize eventually. Democrats and a fair number of Republicans have
plans to spend that money on programs, many of them health-related.
Archer counters: "I believe we must dedicate revenues that result from
tobacco-related legislative action to tax relief for the American
people, especially tax relief for health care."

            This is shrewd. It would be politically difficult to take
the tobacco money and spend it on, say, more capital gains tax cuts. By
linking his tax cuts to health care, Archer creates a pleasing rationale
to get what he wants.

            To say this is not to dismiss Archer's ideas out of hand.
He's right that there are inequities in the tax treatment of health care
costs. If your company pays for your health insurance, your employer
gets to deduct the costs and you do not have to pay any taxes on what he
spends to buy you coverage. It's a great deal if you have
company-provided health insurance. But if you work for a company that
doesn't offer health insurance and you buy it yourself instead, you
generally don't get any tax break. And if you're self-employed, you can
deduct only 45 percent of what your policy costs you (though that figure
will rise to 100 percent by the year 2007).

            Archer wants to give individuals who buy their own insurance
the full tax break, speed the changes that will help the self-employed,
create new incentives for small businesses to provide health insurance,
and allow more generous deductions for health expenses. For good
measure, he also wants new tax breaks for medical research.

            Some of these changes might make sense as part of a
comprehensive approach to expanding coverage. The problem is that tax
breaks are an inefficient way to widen access to health insurance. These
tax breaks would be especially helpful to well-off people who already
have health insurance, but they wouldn't be big enough to help
lower-middle-income people afford a policy.

            Why? Tax deductions disproportionately benefit the
well-to-do because their income tax rates are higher. If you're in the
39 percent tax bracket, a deduction is worth much more to you than to
someone in the 15 percent bracket.

            A recent study by Consumers Union reported that 30 percent
of workers earning less than $10,000 a year are uninsured, compared with
18 percent of the total work force and only 4 percent of workers earning
more than $50,000 a year. Gail Shearer, director of health policy
analysis at Consumers Union, speaks a difficult truth: Health insurance
has become so expensive that for people of modest incomes to afford it,
"we're going to need some targeted subsidies." If anyone has first claim
on tobacco money, it is those who can't even afford health coverage.

            But Archer's proposals at least offer an opportunity to
expand the debate about how to get coverage to the 41 million uninsured.
His tax cuts, Clinton's ideas to expand Medicare and proposals to create
a health care bill of rights all remind us yet again that Congress will
be plagued by the issue of guaranteeing access to health care until it
finally solves the problem.

A9 Copyright 1998 The Washington Post Company