Employer healthcare tax breaks would be replaced with refundable tax credits for individuals under a proposal offered on Tuesday by House of Representatives Budget Committee Chairman Paul Ryan.
In a speech to Stanford University's Hoover Institution in California, Ryan said his measure, which would effectively dismantle the way most Americans receive medical coverage, should be part of any Republican plan to replace President Barack Obama's healthcare overhaul.
Ryan's proposal is certain to draw fire from Obama's Democrats and has little chance of advancing in Congress before the 2012 presidential and congressional elections.
Eliminating healthcare tax breaks for business would likely encourage most companies to drop their employer-sponsored plans. That was an argument Republicans used against Obama's healthcare overhaul.
But Ryan said his plan would put patients more in control of their healthcare and go a long way toward reining in soaring healthcare costs.
"By putting the power into the hands of individuals, we can let competition work in healthcare just as it does everywhere else," Ryan said.
The new proposal is likely to revive the political controversy surrounding Ryan's proposal to phase out government-run Medicare and give subsidies to the elderly to purchase coverage from private insurers.
Ryan's earlier plan to privatize Medicare, a popular healthcare program for the elderly, contributed to Democrats scoring an upset victory in a special House election this year in a traditionally Republican district in New York.
A similar proposal to end tax breaks for employer-sponsored healthcare hurt Senator John McCain's 2008 run for president against Obama.