Lawmakers look for new taxes, cuts to pay reform bill

Lawmakers are considering deductions on medical expenses, value-added taxes, spending cuts and other options to foot the reform bill.

Taxpayers can now claim deductions on medical expenses that exceed 7.5 percent of their incomes, a threshold Finance Committee senators are considering raising to 10 percent in an effort to scrape up about $20 billion to help pay for health reform, the Wall Street Journal reports. The change "would fall hardest on middle-income taxpayers who are uninsured and who come up against expensive health problems."

It is less likely medical and dental services purchased by wealthy taxpayers will exceed 7.5 percent of their income, and the value of the deduction is already low for people with lower incomes. "Most likely to be affected by a change to the deduction are households with income between $50,000 and $200,000," the journal reports. The proposal "would be just one part of a broad plan to help pay for a health-care overhaul totaling at least $1 trillion" (Vaughan, 6/22).

Other components of potential plans to raise $1 trillion include new taxes, such as a value-added tax on consumption (VAT), "sin taxes" such as those on alcohol, requirements for employers to foot more of their employees health costs, reduced subsidies for low-income people to buy insurance, and hefty cuts to Medicare and other government health programs, Kaiser Health News reports (Gold, Pianin and Appleby, 6/22).