One item has gone nearly unmentioned in the media about the repeal of the Affordable Care Act: it would be a massive tax cut for wealthy Americans.
“One of the main ways the ACA makes health insurance affordable is by providing families earning less than 400 percent of the poverty line (i.e., less than $85,000 for a family of three or less than $47,550 for a single person) with tax credits to defray the cost of purchasing insurance. Giving people money helps make things more affordable.
“President Obama and the congressional Democrats who wrote the law didn’t find the money for those subsidies hidden in a banana stand — they did what Democrats like to do when paying for things and raised taxes on affluent families. … Subsidizing the health care costs of working-class people is expensive, and while Democrats want rich people to pay the freight for doing it, Republicans do not.”
The Affordable Care Act includes a 3.8% tax on investment income for individuals with incomes exceeding $200,000 ($250,000 for couples), and a 0.9% payroll surtax on earnings. The payroll tax hike is relatively small, though it touches a broad group of affluent individuals. The investment income tax, while sizeable, affects only a small group of people: those who receive hundreds of thousands of dollars in investment income.
As it happens, a member of that small group lives right here in Washington: Bill Gates, the wealthiest person in the world in 2016. How would the tax cut associated with ending the Affordable Care Act affect him? Well, last year his wealth increased from $75 billion (2015 year-end) to $84.4 billion (2016 year-end) – a $9.2 billion increase. Were the ACA repealed, he would have saved $350 million.
Here in Washington, that $350 million alone could provide coverage through Apple Health for 70,000 lower income adults. It could cover more than 7/8ths of the cost of the tax credits and subsidies that make health care affordable for 150,000 participants in the health benefit exchange.
After Gates met with President-elect Trump, he told CNBC that Trump has the opportunity to establish “American leadership through innovation”. But there’s nothing particularly innovative about eliminating or reducing health coverage for 200,000+ Washington residents in exchange for giving hundreds of millions of dollars in tax cuts to the wealthiest people in the nation.