ACA repeal: millions lose insurance, billionaires get a tax cut

January 18, 2017 | John Burbank

Bill Gates is one of a handful

If Congress and President-elect Trump succeed in repealing the Affordable Care Act (ACA) Bill Gates is one of a handful of people who would get millions of dollars in tax cuts. (Photo: Wikimedia)

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 Were the ACA repealed, he would have saved $350 million.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.

Posted in Health Care, Tax and Budget, Tax Reform

Comments

  1. Jon Winter says:

    this is flawed regarding Bill Gates in that it would only be on realized income and not the paper gain of this worth.

    • John Burbank says:

      Consider this a yard stick estimation. When you find out (!) what his realized income is, let me know and we can do the calculations! ~John

  2. Jon Winter says:

    edit “his worth”

  3. Anne Fletcher says:

    Health care for every man, woman, and child in this nation is more important than any other single issue facing this nation.
    We can afford it, we need it, and there is no excuse.
    Next on the list is publicly funded education for everyone to level the playing ground for all children and allow them to develop their innate talents. Free public libraries and public schools have built this country. We need to keep both.
    Build our future by funding our most precious resource: our children.

  4. Bryan says:

    How many millions more would lose their insurance if nothing was done and it just collapsed, like it most assuredly would?

  5. David Provence says:

    I am not one of the wealthiest people in America( not even close). My insurance premium tripled during ACA. I don’t think repealing it will fix that but it sure makes me angry.

  6. will says:

    Bill and Melinda Gates should be exempted from criticism in this regard. They and their foundation have given and will give for many years.

  7. lemmonaide says:

    Well, there are more people around here earning $200k/$250 than you seem to realize. A 2-tech couple can easily earn that much. This tax cut doesn’t just affect Bill, it affects thousands of people in Seattle and on the eastside.

  8. Jeff Boyer says:

    Agree with lemmonaide. That amount of income is not as unusual as it once was and does go as far as it once did. Still, we have to pay for universal healthcare somehow. Let’s make it as progressive as possible. Also, let’s try to address the big problem, which is that our healthcare costs far too much compared to the rest of the world, especially given the results that it buys.

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