Monday, July 10, 2017

NY Times -- The Hidden Subsidy That Helps Pay for Health Insurance

As Republican senators work to fix their troubled health care bill, there is one giant health insurance subsidy no one is talking about.

It is bigger than any offered under the Affordable Care Act — subsidies some Republicans loathe as handouts — and costs the federal government $250 billion in lost tax revenue every year.

The beneficiaries: everyone who gets health insurance through a job, including members of Congress.

Orrin Hatch, chairman of the Senate Finance Committee has likened the Affordable Care Act to the dole. “Let’s face it,” he said, “once you get them on the dole they’ll take every dime they can.”

Really? Here’s the yearly cost of America's 4 biggest healthcare programs:

1. Medicare, $581 billion.

2. Medicaid, $349 billion.

3. The exclusion of employer-provided health benefits from employees’ taxable incomes, $250 billion.

4. The Affordable Care Act, $119 billion. (Medicaid expansion under the Act costs $70 billion, and subsidies under the Act cost $49 billion.)

Note that #3 is more than twice the cost of the Affordable Care Act.

But most of the benefits of #3 go to richer Americans.

People with incomes less than $30,000 save about $1650 by not paying taxes on employee health benefits. People with incomes above $200,000 save an average of $4,580. (This is from a 2008 study by the Joint Committee on Taxation.)

So richer Americans who get employer health benefits tax free are on a bigger dole than poorer Americans who get their healthcare under the Affordable Care Act.

Given this, why would any sane person choose to repeal the Affordable Care Act and give the tax savings to the rich?

By Kate Zernike