Healing power of tax deductions

Ribble’s latest tax bill aims to bring incentives for those who pay their own health care

Voters in Wisconsin’s Eighth Congressional District might not draw many parallels between former Congressman Steve Kagen, the Appleton Democrat who represented the district from 2006 to 1010, and Rep. Reid Ribble, the Sherwood Republican who unseated Kagen last November.

Though both appeared at seemingly opposite ends of the political spectrum during the campaign a year ago, they both share a common interest in fixing health care.

Kagen, a physician and former owner of the renowned allergy clinic that bears his name, spent much of his four years in Washington pushing for definitive menu pricing for health care procedures, holding the belief that it would allow patients to purchase health care in much the same way that they analyze information to make decisions about purchasing a car or a flat-screen television. Kagen also sought the creation of massive purchasing groups to allow individuals from across the country to pool their financial strength together in order to command more competitive pricing for health care insurance. Neither idea made its way into a bill for Congress to consider.

Ribble, the freshman representative from northeast Wisconsin to the lower house of Congress, has likewise taken a leading interest in the nation’s health care debate, particularly from the standpoint of an employer attempting to manage its benefit expenses. Ribble spent his career owning a handful of roofing companies, and routinely recognized the toll that out-of-control health insurance premiums took on both the company and it’s employees. In a recent interview with New North B2B magazine, Ribble said his own business’s health care costs went up 20 percent a year ago.

Two months ago, Ribble introduced the Health Equity Act of 2011, a piece of legislation designed to give Americans greater incentive for taking care of their own health, as well as for the responsibility to take on their own health care and health care insurance costs. The bill would allow sole proprietors to fully deduct the cost of their own health insurance from their individual income taxes, and would also allow individuals purchasing health care on their own to deduct the cost of the health insurance from their gross income.

As the cost of health care benefits continues to grow and outpaces other operational costs for a business, Ribble said he’s increasingly witnessing employers who choose to drop their health insurance benefits altogether. He said his legislative measure could ease the burden of such a shift, both for business owners as well as for their employees.

“I want to be out ahead of that,” Ribble said.

His bill would also extend a tax deduction to individuals of up to $1,200 in costs associated with fitness programs, athletic club memberships, fitness equipment and weight loss programs. These wellness measures are aimed at Americans taking the responsibility upon themselves to become healthier, using fewer health care services down the road, and ultimately driving down the cost of health care to a more manageable level. It’s part of an improved health care climate in the United States in which Ribble said Americans move closer to being responsible for their own health care and feeling what health care actually costs in its totality.

The bill seems like a winner, particularly for sole proprietors and other would-be entrepreneurs reticent to jump into business ownership because they’re afraid of losing their employer-based group health insurance. So can the proposal become law? By Ribble’s own admission, it’s not likely to make it as far as the president’s desk.

The Health Equity Act is gaining steam and support from others in the Republican-backed House of Representatives, Ribble said, but he doesn’t see the Senate moving forward with the bill once it advances to the upper chamber of the capitol.

So it would seem curious, why don’t his colleagues in Washington get it?

“They haven’t run a business,” said Ribble, who’s been tapped by Republican leadership in the House to serve on a handful of small business and job creation initiatives. “If you lived in a system where your health insurance is handed to you every year, you’re not going to be sympathetic to the guy who is footing the bill for the health insurance.”

Hopefully that mindset from Ribble’s colleagues on the Hill changes before Obamacare is fully ushered in during the next couple of years.