Senate OKs Tax Break for Self-Employed : Congress: Legislative action restores the 25% deduction on health insurance premiums for 1994 and raises the limit to 30% thereafter.

WASHINGTON —  The Senate approved legislation Friday that would grant self-employed Americans a 30% tax deduction on their health insurance premiums, in the first of what is likely be a series of health care reform bills aimed at broadening coverage or controlling costs.

By a voice vote, the Senate revived a tax code provision that expired in 1993, a move that will benefit about 9 million Americans--primarily small-business owners and farm families. The Senate action permanently restores the 25% tax deduction for calendar year 1994 and raises the limit to 30% thereafter. Many taxpayers have delayed filing their 1994 returns in the hope that Congress would restore the tax deduction retroactively, senators said Friday.

Since its enactment in 1986, the tax provision has required annual congressional extension. But that attempt failed last year amid the collapse of President Clinton’s massive health reform agenda.

To offset the tax break’s anticipated $3.4 billion in revenue loss over a five-year period, the Senate bill at the same time repealed an affirmative action tax break aimed at encouraging sales of cable television and broadcast firms to minority investors. That repeal was protested by several senators, including Carol Moseley-Braun (D-Ill.), who said in a floor speech that “diversity of voice in our electronic media remains critically important.”

The House approved essentially the same bill last month.

The 30% deduction would make health coverage more affordable for many who do not have access to employer-provided insurance.

After an acrimonious national debate in 1994 doomed Clinton’s health reform plan, it hardly seemed likely that the new Republican Congress would have much of an appetite to revisit the nettlesome issue.

But as Friday’s vote suggested--and as the President long has contended--health reform issues cannot be ignored if the budget deficit is to be brought under control. And many Republican members of Congress have begun promoting the need to enact reform measures.

Among them is Senate Majority Leader Bob Dole (R-Kan.), who in a speech earlier this year called for reforms to cut costs, to ensure that medical insurance can be “portable” from one job to another, to guarantee renewability and to bar insurers from dropping customers after the onset of costly illnesses.

“There is no excuse for letting another year go by without passing some of the insurance reforms we have talked about for so long,” he said.

Dole and House Speaker Newt Gingrich (R-Ga.) have also called for reforms in Medicare and Medicaid, the massive government programs for the elderly, the disabled and the indigent.

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“You can’t get to (zero) budget deficit without taking on health care reform,” Sen. Patty Murray (D-Wash.) said Friday.

“The problems are inescapable,” added Henry Aaron, director of economic studies at the liberal Brookings Institution who spoke at a Friday afternoon health reform seminar for congressional aides. Robert Moffitt, deputy director of social policy studies at the conservative Heritage Foundation, agreed, saying: “You can’t run and hide from these issues.”

Also on the congressional agenda is medical malpractice reform, which the nation’s physicians have been adamantly demanding.

The House already has passed, as a part of its recent legal reforms package, a $250,000 cap that any medical malpractice victim may receive as compensation for non-economic damages. The Senate Labor and Human Resources Committee is scheduled to take up the issue on Tuesday.

With the restoration of the tax deduction for the self-employed, “the Senate begins the effort to pick up this year where we left off last year on the very important issue of health care reform,” Sen. Edward M. Kennedy (D-Mass.) said after the vote.