The Politics of Taxes in the Affordable Care Act

June 5, 2018

The Affordable Care Act includes taxes on medical providers and insurance companies — taxes that make healthcare more expensive. As MIT Professor Jonathan Gruber (one of the ACA’s architects) said, the “lack of transparency” of these obscure taxes “is a huge political advantage.” This chapter shows that when the revenue-raising tools for a policy plan are hidden from voters, the project will appear to be a better deal for taxpayers than it actually is. The ACA’s revenues include the individual mandate as well as taxes on healthcare providers and insurance companies rather than taxes applied directly to consumers. While the ACA is a highly visible and controversial piece of legislation, a study of its revenue systems provides broad lessons on tax policy. Politicians who are seeking to appear as if they are providing constituents with large benefits at a reasonable price will attempt to obscure the cost of the programs they implement, reducing transparency in the process.

via The Politics of Taxes in the Affordable Care Act by Randall G. Holcombe :: SSRN


ObamaCare taxes won’t be delayed until next year

December 21, 2017

Brady introduced a package last week that would delay ObamaCare’s taxes on medical devices for five years, on health insurance for two years and the “Cadillac tax” on high-cost health plans for one year.

The medical device tax and the health insurance tax are slated to go into effect Jan. 1 after being delayed by Congress in 2015.

via ObamaCare taxes won’t be delayed until next year | TheHill


Pharma & Healthcare #BeltwayBrief DEC 13, 2017 @ 08:01 AM 1,011 The Little Black Book of Billionaire Secrets Under New Bill, Medical Device Tax Might Vanish, But Only Temporarily

December 14, 2017

A controversial tax on medical device sales under the Affordable Care Act could be suspended again rather than disappear permanently under new legislation emerging in the Republican-led Congress.

The 2.3% tax on medical device sales that is part of the ACA has already been on a temporary hiatus since the beginning of 2016. That suspension is scheduled to expire at the end of the month.

But new legislation emerging in the U.S. House of Representatives would put the medical device tax on another hiatus. Reps Erik Paulsen (R-Minnesota) and Jackie Walorski (R-Indiana) said the proposed legislation would suspend the medical device tax for another five years under a new bill introduced Tuesday.

via Under New Bill, Medical Device Tax Might Vanish, But Only Temporarily


A Tax Reform President Trump Should Like, and You Should Too | Manhattan Institute

August 17, 2017

Democratic lawmakers delayed the onset of the Cadillac plan tax from 2013 to 2018 in the 2010 reconciliation bill that enacted parts of the ACA. More recently, lawmakers delayed it again, postponing its effective date to 2020. The distaste for the Cadillac tax is clearly bipartisan, as the House Republicans’ American Healthcare Act — their ACA repeal-and-replace bill — would further delay the tax to 2025, and the Senate’s version of this bill would push it off to 2026.

Instead of kicking the can farther down the road, a different approach to dealing with employer-sponsored insurance is needed. In a new Mercatus Center report, we discuss some potential options available to policymakers.

Source: A Tax Reform President Trump Should Like, and You Should Too | Manhattan Institute


The Cadillac Tax and Its Potential to Transform How Americans Purchase Health Care Services by Richard L. Kaplan :: SSRN

December 23, 2016

This Article examines one of the most contentious provisions of the Affordable Care Act – namely, the 40% excise tax on high-value health insurance provided by employers. This levy, commonly denominated the “Cadillac” tax, is scheduled to take effect in 2020 but has already induced many employers to raise annual deductibles on the health insurance they provide to reduce the value of such insurance and thereby lower their exposure to this new tax. After analyzing the administrative guidance proposed since the Cadillac tax’s enactment, this Article considers how that tax’s effective encouragement of high-deductible health insurance plans has inadvertently made the Health Savings Accounts that President George W. Bush promoted 15 years earlier much more appealing.

Source: The Cadillac Tax and Its Potential to Transform How Americans Purchase Health Care Services by Richard L. Kaplan :: SSRN


Repealing the Affordable Care Act Would Cut Taxes For High Income Households, Raise Taxes For Many Others | Tax Policy Center

December 15, 2016

On average, the lowest-income households (that make less than about $25,000) would see their taxes rise by $90, or about 0.6 percent of their after-tax income. But that average masks a wide variation. Most low-income households would see no change at all in their taxes. But about 7 percent would get a tax cut of about $1,200 on average while 4 percent would face a very big tax hike, averaging nearly $3,900—mostly because they’d lose the benefit of the premium subsidies.

Source: Repealing the Affordable Care Act Would Cut Taxes For High Income Households, Raise Taxes For Many Others | Tax Policy Center


Taxing the rich more—evidence from the 2013 federal tax increase – Equitable Growth

November 3, 2016

In 2013, a surtax on high earners was levied to help pay for the Affordable Care Act at the same time as the 2001 tax cuts for high-income earners that were signed into law by President George W. Bush expired. The 2013 tax increase on high earners was the largest since the 1950s, and larger than the previous increase of the top tax rate by the Clinton administration in 1993. The 2013 tax increase is concentrated among the top 1 percent of income earners. The Congressional Budget Office statistics show that the average federal tax rate—comprised of all federal taxes (individual, corporate, and payroll)—on the top 1 percent of income earners rose by 5 points, from 29 percent before 2013 to 34 percent in 2013.

I estimate that only about 20 percent of the projected revenue increase from the 2013 tax hike is lost due to the behavioral responses over the medium term.

Source: Taxing the rich more—evidence from the 2013 federal tax increase – Equitable Growth