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.
