Congressional Budget Office

helpful insights. The views expressed in this paper are those of the author and should not be interpreted as those of the Congressional Budget Office. Fundamental health reform proposals often envision a key role for the income tax system in achieving their goals. These goals include expanding coverage of health insurance, while containing the growth of medical costs. Health reform proposals may cap or eliminate the current exclusion for employer-provided health insurance, create new tax-based subsidies for health insurance, and use the Internal Revenue Service (IRS) to enforce individual or employer mandates. Since 2007, Massachusetts’s Department of Revenue must enforce a mandate requiring individuals to obtain health insurance coverage, although other components of the state’s health reform are administered by other agencies. Using the IRS to achieve health reform goals could build on some of the strengths of the income tax system. First, the current income tax provides substantial subsidies for health care through the exclusion for employer-provided health insurance, the above-the-line deduction for health insurance purchased by self-employed workers, the itemized deduction for medical expenses, the tax preferences for contributions to medical savings accounts, and the refundabl