Testimony on HB 3611 regarding individual health insurance

Steve BucksteinCascade Commentary

Before the House Committee on Health Care in favor of making individually purchased health insurance tax deductible

February 3, 2010

Good afternoon, Chair Greenlick and members of the Committee. My name is Steve Buckstein. I’m Senior Policy Analyst and founder of Cascade Policy Institute, a public policy research organization based in Portland.

Why are my health insurance premiums tax deductible if paid by my employer, but fully taxable if I pay them myself, which I do by the way. This dichotomy has been part of our nation’s tax code for far too long.

I agree with Senator Wyden that we should decouple health insurance from employment. As you know, the fact that health insurance is provided by employers at all is something of an historical accident. Our economy would be better off if workers didn’t have to worry about losing their health insurance when they consider changing jobs.

And, employers should not have to decide what portion of employee compensation goes toward insurance premiums versus cash wages. Workers can make those decisions for themselves.

But until that happens, the least we can do is recognize that it’s fundamentally unfair to let employers deduct these costs, but not let the rest of us deduct them when we pay out of our own pockets.

I understand that you might all be in favor of this bill if it wasn’t for the fact that, as written, it will have an impact on state tax revenues. You might consider putting a cap on the level of premiums that can be deducted. That way, the savings from people moving off state provided insurance, and the savings from individuals not having to fall back on state services in the first place might very well offset the revenue losses. This approach could be win-win for the state and countless Oregonians who simply want to be treated fairly when it comes to making such an important purchase.

Hearing audio is here.  Buckstein testimony begins at 3:40.

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