A House bill that’s due to show up in the next few days will include about 75 proposals for changing U.S. health care finance and delivery rules and programs — and a provision that would cap the current federal income tax exclusion for employer-sponsored health benefits.
The Fair Care Act of 2024 bill is the fourth version of a bill Rep. Bruce Westerman, R-Ark., has introduced during earlier terms of Congress. Westernman has already created an entry for the new bill in the Congress.gov system. At press time, Congress.gov had not yet posted a copy of the text of the bill, but Westerman’s office made a preliminary version available to BenefitsPRO.
Like the three earlier versions of the bill, the new version includes provisions that could limit an employer to excluding only $10,200 in spending on employee-only coverage and only $27,500 from spending for family coverage coverage from taxable income.
Some of the other bill provisions would repeal the Affordable Care Act employer health insurance mandate, let people who are offered employer-sponsored health coverage qualify for ACA health insurance premium subsidies and require providers to send patients timely, transparent bills, according to a bill introduction announcement.
Analysts at the Congressional Budget Officer recently included a similar cap on the current group health tax exclusion in an analysis of proposals for cutting the federal budget deficit.
The CBO analysts predicted that, if nothing changes, the United States will add about $20 trillion in public debt over the 10-year period from 2025 through 2034.
Setting an employer health benefits tax exclusion cap similar to the one included in the Westerman bill could add $709 billion in tax revenue over that period, meaning that it might reduce debt accumulation by 3.5%, according to the CBO analysis.
Garrett Hohimer, a vice president at the Business Group on Health, scoffed during a recent Employee Benefit Research Institute webinar at the idea that Congress might just nibble at the current employer health benefits tax exclusion.
“My concern is there is that, once they encroach on the tax treatment of health care, it’s gone,” Hohimer said. “The tax rate is going to go up and down over time, but once this tax exclusion is gone, it’s gone. It will never come back, and we will be dealing with a different universe.”
The new version of the Fair Care Act bill has no cosponsors. The bill is under the jurisdiction of nine House committees.
But it arrives as members of Congress are drafting a big, must-pass disaster relief package and a measure for keeping the federal government from shutting down. It’s possible that congressional leaders could look in the bill for ideas about what to put in the must-pass packages.
Even if the bill fails to advance during the current term of Congress, it could return in the 119th Congress, which starts Jan. 3, 2025.