Rising health care costs are a major concern for many Americans. Whether it is the increased costs of health insurance premiums or the high cost seniors must pay out of pocket for their prescription drugs … if it is unaffordable, many will go without necessary treatment.
Earlier this year, I introduced the Medical Cost Deduction Act of 2002, H.R. 4001. It makes health care more affordable by allowing individuals to deduct most of their medical expenditures that exceed 2 percent of their Adjusted Gross Income (AGI).
Since 1942, taxpayers who itemize have been eligible to take a medical deduction for health care costs in excess of a percentage of their adjusted gross income. Current law allows taxpayers to deduct health care costs in excess of 7.5 percent of their AGI. This is a relatively high threshold, one that few taxpayers who itemize can take advantage of.
Under the current 7.5 percent threshold, a taxpayer with an income of $30,000 can deduct out-of-pocket health care costs only when they exceed $2,250. Under my proposal, that same taxpayer will be allowed to deduct health care costs above $600.
The last time the threshold for deductibility of health expenses was lowered was almost 50 years ago in 1954, when Republicans last had control of the House of Representatives. Back then, the threshold was lowered from 5 percent to 3 percent. The House Committee on Ways and Means included in its report on the legislation that there is a “general agreement that limiting the deduction only to expenses in excess of 5 percent of AGI does not allow the deduction of all extraordinary medical expenses.”
Health care is far more expensive today than it was in 1954, and it is safe to say that limiting the deduction only to expenses in excess of 7.5 percent of AGI does not allow the deduction of all extraordinary medical expenses. By lowering the deduction for medical expenses to 2 percent of AGI, H.R. 4001 aims to help families cope with the increasing costs of health care.
Republican Philip M. Crane represents Illinois’ 8th Congressional District.
