Why the Disparity In How Health Insurance Premiums and Medical Expenses Are Treated For Tax Purposes?

I asked that question to the late Congressman Joe Knollenberg and our current Congressman Michael Bishop at at a health forum at the OPC in 2008.  They said that they did not know the answer, but doubted that it was a partisan political issue.  It was not an issue of concern for either party, certainly not the disparity.  I then pointed out that it was occasionally mentioned how a large budget deficit would be created by allowing the self pay to deduct their health insurance premiums.  They did not disagree that it would blow a hole in the budget. 

At a political rally for then Congressman Gary Peters in 2010 the Congressman talked at length about the new health care legislation that was called Obamacare.  How it created health insurance exchanges that would give low income people a subsidy on health insurance bought through the exchange.  I asked him about including in Obamacare a provision to allow the self pay using after tax dollars the opportunity to deduct their health insurance premiums for tax purposes.  He coldly said, No, I have given those people enough of a break.  I said, What about those people who do not receive a subsidy?

Those buying health insurance on the exchanges using after tax dollars are paying a considerable tax on the funds used to pay for the premium.  Enough taxes in fact to cover a good portion of the subsidy they receive through Obamacare.  Obamacare is not as generous as advertised. 

During and after WWII powerful political forces established that employer provided tax free health insurance would be the norm in the U.S., and the model for health care in our country. 

Those who self pay their medical expenses with after tax dollars, especially the health insurance premium  face this disparity and discrimination because they as individuals and a group are a minority and very weak politically.  Neither major political party will stand up for them.  They have no powerful union representing them.  They are not employed by large corporations that will advocate for them.  Many have jobs where the employer will limit their hours so they do not qualify for employer provided health insurance. 

I mentioned that there is concern that giving the self pay the same tax breaks that those with employer provided health insurance will blow a hole in the budget.  Taxes will have to be raised in order to close the budget deficit or cut spending elsewhere.  The folks that would be most unhappy with the tax increase would be the majority that receive no new benefit. 

Did I answer the question at the top?

Ted Golden, M.D.