Osofsky: Wellness And The Tax Law

Leigh Osofsky (North Carolina; Google Scholar), Wellness and The Tax Law, 59 Ga. L. Rev. __ (2025):

The tax law has long provided extensive subsidies for "medical care." These subsidies cost the government hundreds of billions of dollars a year. The definition of medical care, which is at the heart of these subsidies, originated many decades ago, at a time when there was little to no conception of wellness. 

Times have changed in the medical world. Medical science now emphasizes that wellness practices, like exercise, meditation, and social connection, have an important impact on physical as well as mental health, including by playing a significant role in preventing and treating disease. Under the tax statute, medical care includes "treatment. .. or prevention of disease." The tax law nonetheless disallows subsidies for wellness expenditures under the theory that they are "merely beneficial to general health." This tension between medical science and tax law demands that we reappraise tax law's medical care subsidy. 

This Article engages in that reappraisal. It asks what justifies tax law's extensive medical care subsidy and whether it remains justifiable today. The traditional justification for tax law's medical care subsidy is that medical care is different from consumption. As a result, when tax law subsidizes medical care, even in a regressive way, it is not subsidizing spending on personal pleasure or regular, personal maintenance; rather, it is subsidizing compulsory expenses that restore a loss. Yet, the new medical science around wellness reveals that what we have long thought of as pure consumption constitutes medical care. Moreover, changes in the scope of the subsidy over time have resulted in tax law subsidizing many items that are far from compulsory, catastrophic medical expenses. The result is that tax law’s medical care framework subsidizes some forms of consumption, but not others, in a haphazard, incoherent, and ultimately unjustifiable way. 

After exploring the problems with tax law’s medical care subsidy, this Article offers three potential paths forward: an expansion of tax law’s medical care subsidies to more fully account for all expenses that prevent or treat disease; a contraction of tax law’s subsidies to more closely match justifiable goals, such as insuring against catastrophic and compulsory medical expenses; and a progressive wellness credit. This Article finds that the third approach best accounts for how consumption can be medical care and best responds to the ways that higher-income taxpayers benefit from higher privilege to consume.

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