Title VII, SEC. 7203. INCREASE IN DEDUCTION FOR HEALTH INSURANCE COSTS OF 
SELF-EMPLOYED INDIVIDUALS. 
      (a) Provision Made Permanent. 

        (1) In general. Subsection (l) of section 162 (relating to special 
      rules for health insurance costs of self-employed individuals) is amended 
      by striking paragraph (6). 

        (2) Effective date. The amendment made by paragraph (1) shall apply to 
      taxable years beginning after December 31, 1993. 

      (b) Deduction Limited to Basic Coverage Purchased From Health Alliance. 

        (1) In general. Paragraphs (1) and (2) of section 162(l) are amended to 
      read as follows: 

        ``(1) In general. In the case of an individual who is an employee 
      within the meaning of section 401(c), there shall be allowed as a 
      deduction under this section an amount equal to 100 percent of the amount 
      paid during the taxable year for insurance which constitutes medical care 
      for the taxpayer, his spouse, and dependents; but only to the extent such 
      insurance is comprehensive health coverage described in section 1101 of 
      the Health Security Act purchased from a qualified alliance described in 
      section 1311 of such Act. 

        ``(2) Limitations. 

        ``(A) Lower percentage in certain cases. If 

        ``(i) the taxpayer has 1 or more employees in a trade or business with 
      respect to which such taxpayer is treated as an employee within the 
      meaning of section 401(c), and 

        ``(ii) the taxpayer does not pay at least 100 percent of the weighted 
      average premium applicable under the Health Security Act for each of such 
      employees, 

        paragraph (1) shall be applied by substituting for `100 percent' the 
      lowest percentage of such weighted average premium paid by the taxpayer 
      for any of such employees. 

        ``(B) Deduction limited to earned income. No deduction shall be allowed 
      under paragraph (1) to the extent that the amount of such deduction 
      exceeds the taxpayer's earned income (within the meaning of section 
      401(c)). 

        ``(C) Other coverage. Paragraph (1) shall not apply to amounts paid for 
      coverage for any individual for any calendar month if such individual is 
      employed on a full-time basis (within the meaning of section 1901 of the 
      Health Security Act) by an employer during such month.'' 

        (2) Conforming amendment. Subparagraph (A) of section 162(l)(5) is 
      amended by striking ``shall be treated as such individual's earned 
      income'' and inserting ``shall be included in such individual's earned 
      income''. 

        (3) Effective date. The amendments made by this subsection shall take 
      effect on the earlier of 

          (A) January 1, 1997, or 

          (B) the first day on which the taxpayer could purchase comprehensive 
        health coverage from a qualified alliance.