Who Would Actually Benefit From the Deduction?

The households most likely to benefit from Hawley’s proposal include:

• Self-employed workers who buy their own insurance
• Middle- and upper-middle-income families without employer-subsidized plans
• Households with significant out-of-pocket medical expenses
• Taxpayers with substantial federal tax liability

These groups are most likely to both incur high medical costs and have enough taxable income to fully utilize a large deduction.

On the other hand, households that may receive little or no direct benefit include:

• Low-income Americans who rely on Medicaid
• Marketplace enrollees whose premiums are mostly covered by ACA credits
• Workers with low-cost employer plans
• Families with minimal federal tax liability

For these groups, a deduction—even a very large one—may not significantly reduce their tax bills.

Most importantly, a deduction does nothing to prevent people from losing coverage if they simply cannot afford higher monthly premiums once enhanced ACA subsidies expire. A year-end tax benefit does not help families who cannot pay their insurance bills in real time.