Ryan Targets Employee Healthcare Tax Breaks

Republican Representative Paul Ryan, an outspoken opponent of President Barack Obama's healthcare reform, proposed a plan Tuesday that would effectively dismantle the way most Americans get healthcare by reducing employee incentives to participate in employer-sponsored insurance plans.

In a speech at Stanford University's Hoover Institution in California, Ryan said the government should eliminate tax breaks enjoyed by company employees from employer-sponsored healthcare plans.

Instead, individuals would get a refundable tax credit to purchase coverage on their own, shifting the responsibility to some 170 million Americans now covered by their workplace. Ryan argued it would give consumers the needed incentive to demand better value out of their healthcare.

"Choice and competition are critical to controlling costs throughout the healthcare system, while improving quality for patients," Ryan said. "And yet, across the federal landscape, choice and competition are undermined by poorly designed programs and tax policies."

Ryan has already proved an influential voice in the national healthcare debate with a prior plan to privatize the government's Medicare program for the elderly. His new proposal, which quickly drew fire from Democrats, also could play into a congressional "super committee" that is trying to develop a plan by late November to reduce U.S. deficits.

Healthcare experts say the proposal would not necessarily reduce healthcare system costs and could increase the expenses of insurance for many people. A new report on Tuesday showed the cost of health insurance is still climbing for U.S. companies and workers, with family premiums growing this year at a pace triple that of 2010.

"When you break everyone off individually, you diffuse the bargaining power and you have to go and buy insurance on your own," said JoAnn Volk of Georgetown University's Health Policy Institute. "Most Americans, it's hard to imagine they would accept a wholesale change to the employer-based system."

A similar proposal to end tax breaks for employer-sponsored healthcare hurt Senator John McCain's 2008 run for president against Obama. Ryan's proposal has little chance of advancing in Congress before the 2012 presidential and congressional elections.

"Republicans voted to stick it to seniors by ending Medicare, increasing costs and putting insurance companies in charge, and now they're trying to stick it to the middle class by putting millions of Americans at the mercy of insurance companies," said Nadeam Elshami, a spokesman for House Democratic Leader Nancy Pelosi.

Ryan's earlier plan to privatize Medicare, a popular healthcare program for the elderly, contributed to Democrats scoring an upset victory in a special House election this year in a traditionally Republican district in New York.

But Ryan, chairman of the House Budget Committee, noted in his speech that the Republicans picked up a seat in a more recent New York special election. Republicans also held a seat in a special election in Arizona.

"We should not fear false attacks again in 2012," Ryan said.