WASHINGTON — You’ve heard of the proposal “No Tax on Tips,” followed by “No Tax on Overtime.” Now one Republican senator wants to expand the concept: no taxes on certain medical expenses.
“Why not no taxes on health care?” Sen. Josh Hawley, R-Mo., told reporters on Tuesday ahead of the formal rollout. “I mean, just allow people to deduct all of their health care expenses that are paid out of pocket. That would be hugely helpful, and move that above the line.”
Hawley officially began pitching the idea on Wednesday, which would allow taxpayers to deduct up to $25,000 in personal medical expenses as well as additional deductions for out-of-pocket premiums. Specific details on the plan, such as how to pay for those deductions, have not yet been hashed out.
But Hawley told Politico he had already pitched the idea to President Donald Trump, who he said has backed the idea.
The Missouri Republican framed the proposal as a way to expand medical expense deductions that already exist so that more families would be eligible for the benefits.
“In other words, make it such that anybody can add that to their standard deduction, so that most families can get it,” Hawley said. “Right now — and this is going to get really technical, really fast — you can deduct certain medical expenses, but only if you itemize, which is like 3% of taxpayers. And only if it’s above 7.5% of your income. So it’s really, basically, for rich people, so almost no middle-class family can use that.”
The proposal comes as lawmakers scramble to avoid a surge in health care premium costs at the end of this year when a slate of COVID-era Obamacare subsidies expire. Negotiations are ongoing in nearly every corner of the House and Senate, although a deal has not yet been finalized.
Hawley noted his bill would be separate from that framework, but it would work in conjunction to reform the health care system in a broader way.
Although details of a stopgap bill are not clear, there are similar provisions being proposed from all corners of Capitol Hill dealing with new income caps, minimum premiums, and measures to cut down on waste, fraud and abuse.
One of those frameworks is being finalized in the House and could be made public before the end of this week, according to Problem Solvers Caucus Co-Chair Rep. Brian Fitzpatrick, who is leading those talks. That plan would extend the Obamacare subsidies for two years with new income restrictions and other reforms initially proposed by the White House that were later scrapped.
Fitzpatrick, R-Pa., said the Problem Solvers Caucus held a “well-attended” meeting on Wednesday where lawmakers on both sides of the aisle were able to provide feedback, and those suggestions are now being worked into the final product. It’s not clear when legislative text will be available, but Fitzpatrick said the goal is to get something published as soon as possible to hold a vote before lawmakers leave for the holiday recess.
“The goal would be to get it to the floor by the end of the year,” Fitzpatrick told the Deseret News. “So we’d have to just look at the calendar and see how the days matched up.”
Senate Democrats are expected to unveil their proposal to extend the Obamacare subsidies for a vote as early as next week. Details of such a plan are not yet clear, but Senate Minority Leader Chuck Schumer, D-N.Y., told reporters on Wednesday the party is “in lockstep” with House Democratic leadership — who are asking for a separate three-year ACA extension. When asked if the Senate plan would also extend the subsidies for three years, Schumer said: “Stay tuned.”