The plan, backed by some Republicans in the House and Senate, offers a glimpse into how the GOP is mobilizing against Democrats' effort to create a public insurance plan and to require companies to provide or otherwise pay for health-insurance coverage for workers. Republican lawmakers say such measures would bureaucratize the nation's health system and stifle job creation.
Given the Democrats' control of Congress, the Republican plan has little chance of passage. But it reflects some Republican lawmakers' growing dissatisfaction with a bipartisan effort to fix the health-care system. Congressional leaders hope to pass a health-care overhaul this summer.
The government would run a health plan "with the compassion of the IRS, the efficiency of the post office, and the incompetence of Katrina," according to a summary of the Republicans' plan unveiled on Wednesday. Called the Patients' Choice Act, it would eliminate the tax break that employers receive for providing health-insurance benefits to their workers. Instead, it would give an annual tax credit of $2,300 to each individual and $5,700 to each family that they could use to offset the cost of their health insurance. Low-income families would get extra money to buy into private insurance plans.
Rep. Paul Ryan (R., Wis.) said the system of employer-based coverage is becoming "a 21st century relic" as companies become less generous with benefits.
President Barack Obama has tasked Congress with drawing up legislation to reduce health-care costs and expand health-insurance coverage. He and many Democrats want to create a new public insurance plan to help cover the uninsured and create competition for private insurers.
The Republican plan introduced Wednesday shares some things in common with measures Democrats are pushing. Both parties want to create insurance exchanges that make it easier to comparison-shop for health-care plans. They also want to shift health-care dollars toward preventing chronic diseases like heart disease and diabetes, not just because it will make Americans healthier, but because prevention is cheaper than treating people once they get really sick.
Senate Finance Committee Chairman Max Baucus (D., Mont.), who is leading the effort to draft a health overhaul, said that while this Republican measure meets many of his goals, eliminating the tax incentives for employer-provided health benefits "would destroy the employer-based health-care system we have today."
Karen Davenport, director of health policy at the liberal-leaning Center for American Progress Action Fund, said the Republican plan's tax subsidy wouldn't cover half of the cost of the average family's health-care premiums.
Rep. Ryan introduced the legislation with Sens. Tom Coburn (R., Okla.) and Richard Burr (R., N.C.), and Rep. Devin Nunes (R., Calif.).
Many Democrats are backing the idea of curbing the health-care tax exclusion, which exempts employer health-care benefits from taxation. Under proposed changes, wealthy individuals and people with particularly generous benefits could pay some taxes on their benefits. But most Democrats don't want the exemption eliminated altogether, as called for under the Republican plan.