Ryan Introduces Health-Care Voucher Bill

Press Release

Ryan Introduces Health-Care Voucher Bill

Making health-care coverage more affordable and accessible to people, whether or not they have employer-sponsored health insurance, is the goal of health-care legislation that First District Congressman Paul Ryan introduced today in the House of Representatives.

Ryan's bill, H.R. 914 - the Tax Equity and Affordability Act, would provide an annual advance tax credit (in effect, a voucher) to assist those who do not have employer-based health insurance with purchasing health coverage. This is a different approach than the tax deduction the President recently proposed, because it would deliver up-front assistance for individuals seeking to buy health coverage.

The legislation works to make the tax code more equitable in its treatment of individuals and families without employer-sponsored health benefits, while helping bring down the high cost of coverage which is a growing burden for both workers and employers. At the same time, it protects the important role of employer-based health insurance, because it improves tax fairness without discouraging employers from offering health coverage as part of their employee benefits package.

Under the current system, our tax code strongly favors those who have employer-sponsored health coverage over those who try to obtain insurance on their own. This unfair tax treatment also does nothing to discourage price inflation - a problem that makes it difficult not only for the uninsured and self-insured, but also for those who have employer-sponsored, gold-plated health coverage who pay ever-growing premiums as the cost of these plans escalates.

"It is totally unacceptable that we have 46 million Americans without health insurance. I intend to focus my efforts on fixing this crisis and on bringing down health-care costs," Ryan said.

"We need to get a handle on the rising cost of health care and the tax biases that distort coverage options and prices under the current system," Ryan said. "This bill seeks to even out tax treatment for those who have employer-based health insurance and those who do not. It delivers immediate assistance to people without employer-provided insurance to help them get coverage, improving access and affordability for many who are at a disadvantage today. On top of this, it creates an incentive for employees who do have coverage through their workplace to choose a moderately priced policy, rather than the most expensive option. This will help control costs and make health coverage more affordable."

The Tax Equity and Affordability Act would:

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Establish an advanceable, refundable tax credit for individuals and families without employer-based health insurance. Lower-income individuals would be eligible for a credit worth up to $2,000 annually. Lower-income families would be eligible for a credit worth up to $4,000 annually. Individuals earning over $30,000 and families earning over $60,000 would be eligible for annual tax credits worth $1,250 and $2,500, respectively.

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Help the uninsured get coverage, while promoting personal choice and ownership of health insurance policies. By providing an advance tax benefit to the uninsured, the self-employed, and others who lack health coverage through their workplace, this bill establishes more equitable tax treatment for these people, extending to them the same kind of benefit that people with employer-sponsored health care have enjoyed for many years. At the same time, by encouraging ownership of one's health insurance, the bill encourages portability of coverage from job to job or during periods of unemployment - which will help reduce the number of uninsured and promote continuity of care for individuals who rely on a specific set of doctors.

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Cap the current open-ended, employment-based tax exclusion for health benefits. Under current law, non-taxable compensation for health-care benefits is unlimited - no matter how expensive the benefit or how high the person's income. This bill would keep employer-based health coverage tax-exempt up to an $11,500 cap for family coverage and a $5,000 cap for self-only coverage. Health benefits above that amount would be taxable. These caps mirror the average cost of health insurance nationwide for families and individuals. By establishing these reasonable caps for tax-exempt employer-sponsored health coverage, we can encourage more people to opt for better-value coverage options, instead of the most expensive plan available. This will combat further escalation of insurance costs, and it will help businesses stay competitive by lowering the cost of providing health coverage for their workers.

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Promote fiscal responsibility. While the congressional Joint Committee on Taxation is still working on a cost evaluation of this legislation, an earlier estimate of similar legislation showed that this proposal more than pays for itself - saving the federal government money over five- and ten-year periods.

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