AFP Letter on Rep. Roe’s American Health Care Reform Act

September 16, 2013

Dear Representative Roe:

On behalf of Americans for Prosperity’s two million activists across this country, I applaud you for to introducing the American Health Care Reform Act, which repeals ObamaCare and reforms the U.S. health care system. Many of the problems in our health care system can be traced back to our reliance on employer-sponsored insurance (ESI). Your bill seeks to ameliorate the condition by eliminating the income exclusion for ESI and replaces it with an above-the-line standard deduction of $7,500. This equalizes the treatment between ESI and individuals who purchase insurance directly.

AFP supports your attempts; however, we are concerned that this treatment will not fully solve the issue. Your bill ties the value of the standard deduction to the Consumer Price Index instead of a measure of health care inflation. This bill will work to control the rapid growth in health care spending, but over time the value of this deduction will decrease hurting taxpayers. Additionally, it is preferable and better tax policy to provide individuals with a tax credit—not a deduction—for the purchase of insurance.

Further, your bill will lower tax burdens for 80% of Americans. This is a great first step, but repeats a key mistake of ObamaCare—raises revenues in the name of reform. Any health care reform package must not include a tax increase for individuals. By eliminating the exclusion of health insurance, individuals will likely move into higher tax brackets resulting in higher tax bills. Changes to the tax treatment of ESI should be paired with decreases in income tax rates to hold taxpayers harmless.

Finally, your bill provides federal funding for state high-risk pools. Insurance coverage for those with pre-existing conditions is an important issue to consider. No family wants to be in a situation where a loved one is unable to receive treatment due to a condition outside of their control. However, your bill seeks to cap insurance premiums for those in the high-risk pool at 200% of other premiums. A fully-functioning and healthy insurance market needs the ability to properly rate the cost of insurance to match the individual’s risk. Setting arbitrarily price-caps improperly restricts the free-market.

Americans for Prosperity is encouraged by efforts to repeal ObamaCare and finally move towards a free-market health care system. While Americans for Prosperity has reservations about this bill in its current draft, I look forward to working with you on this and other related bills.

Sincerely,

Christine Harbin Hanson
Federal Affairs Manager
Americans For Prosperity

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