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Floor Statement of Michael B. Enzi
Equalizing the Tax Treatment of Health Insurance
February 2008

Mr. ENZI.  Mr. President, I rise today to talk about finding solutions to our health care crisis.  My wife Diana and I travel to different parts of Wyoming most weekends.  One of the number one issues on people’s minds is their health care.  They all ask me what I am doing to make sure they have the health care they need.  I am able to tell them a lot about the things I am working on, but I am not able to tell them very much about things actually getting accomplished.  This troubles me because our constituents deserve our help.  It is time for real action and I hope that we are able to do something on health care this year. 

As the Senior Republican of the Committee on Health, Education, Labor, and Pensions, I spend a lot of time working on health care issues.  I have spoken to this body many times about a bill I am working on – “Ten Steps to Transform Health Care in America” – that will fix many common complaints I hear from my constituents.  Today, I’m going to focus on one step, the first step, equalizing the tax treatment of health insurance for ALL Americans, not just the ones that get their health insurance at work.  I encourage everyone watching to look at my website, enzi.senate.gov, to learn more about all the steps of the bill. 

Before I go into the details of step one, I will say just a few things about the entire proposal.  If the Ten Steps bill were to become law, the end result would be an insurance card for everyone.  Lots of people have insurance cards now. Members of Congress have them.  People that work for big companies have them.  The kids in Wyoming that participate in the State Children’s Health Insurance Program have them.  Lots of people have them.  And, most of those people that have insurance cards are happy with the care they are getting.  The bill doesn’t change that.  If you have an insurance card now, you can keep that card and keep getting the exact same care you are getting now. 

The problem, Mr. President, is the 47 million or so Americans that don’t have an insurance card.  My bill gives all those people cards.  If they can’t afford the cards because they are low-income, my bill helps them out by giving them the money they need to purchase the insurance card.  The bottom line is that everyone has a card, and everyone will be able to get the care they need.

So, how does the bill get everyone an insurance card?  And will the bill bust the budget in the process of getting everyone an insurance card?  The bill won’t bust the budget – it won’t be free – but it won’t bust the budget.  How is this possible? 

Well, in order to understand how the bill works, it is important to review a few facts about the history of health insurance in our country.  Right now about 60 percent of folks under age 65 are getting their health insurance through their job.  The question is, why?  Why are 60 percent of Americans getting their health insurance through their job?  Well, the short answer to that question is because of the way employer sponsored health insurance is treated for tax purposes. 

Our current health insurance system is biased toward employer-based coverage due to a historical accident.  The wage controls of World War II increased competition among employers for recruiting the best employees and incentivized employers to offer health benefits instead of increased wages.  In 1954, Congress codified a provision declaring that such a contribution would not count as taxable income. 

This tax policy made it very favorable for individuals to get their health benefits through their employers and consequently has penalized individuals that get coverage through the individual market.  We must eliminate unfair tax treatment of health insurance, expanding choices and coverage and giving all Americans more control over their own health care. 

The Joint Committee on Taxation estimated that removing this tax bias and a few related health care tax policies will save the federal government $3.6 trillion over the next ten years.  That is a lot of money that can and should be used to expand choices and access and give individuals more control over their health care.  Ten Steps ensures every American can benefit from this savings—whether they get their health care from their employer, from the individual insurance market, or they decide they want to get off Medicaid and switch to private insurance. 

So how does the bill do this?  The plan gives all Americans that have at least a certain amount of health insurance a standard deduction.  The national, above-the-line Standard Deduction for Health Insurance will equal $15,000 for a family and $7,500 for an individual.  The bill also gives low income folks a tax credit equal to $5,000 for a family, $2,500 for an individual.  The subsidy amount phases out as income gets higher, so some folks won’t be eligible for the subsidy at all, but everyone is eligible for the standard deduction.  Because the bill takes this hybrid approach of coupling the standard deduction proposal with the tax credit proposal, no particular population is adversely affected.  The tax code would no longer penalize folks that don’t get their insurance through their job.  

Let me be clear:  my goal is not to erode employer-based health insurance, given that Ten Steps does not alter the way that employers treat health insurance.  Rather, I want to provide more options for individuals who don’t currently have insurance through their employer. 

Correcting a flawed tax code would make it easier for working Americans to buy health insurance. Jobs don’t need health insurance – people do. American families who aren’t insured through their employers should have the same access to care. Everyone should be treated equally.

I hope we can move forward quickly on making these changes so every American can get health insurance. It is time for real action.

I yield the floor.