House Republican ACA Repeal Plan Replaces Taxes on Rich and Corporations with Taxes on Middle-Class Workers

Americans for Tax Fairness Executive Director Frank Clemente made the following statement in response to a news story about a significant shift in health care financing reported on Thursday, March 2, by CQ's Erin Mershon and Joe Williams (behind a paywall here, but also tweeted here by one of the CQ reporters). The story reported Rep. Phil Roe (R-TN) said the secret Affordable Care Act (ACA) repeal plan from House Republican leaders would impose $200 billion in new taxes on middle-class workers by taxing their health benefits, which are currently excluded from taxation:

"House Republicans want to tax workers' health care benefits rather than continue to require the wealthiest Americans and big healthcare corporations to help finance health care for 20 million people now getting covered under the ACA. If true, the GOP healthcare repeal plan means the rich will get richer, millions will lose their healthcare, and workers will pick up the tab.

"When Republicans talk about 'repeal and replace,' now we know they mean replace taxes on billionaires and big corporations with taxes on working families.

"The Republicans' reckless assault on the ACA already risks the health coverage of millions of Americans while handing more than $525 billion in tax cuts over 10 years to the nation's wealthiest households, health insurance corporations and drug firms, according to Congressional Budget Office data analyzed by Americans for Tax Fairness.

"ATF's analysis shows that wealthy taxpayers would get a tax cut of at least $346 billion and insurance, prescription drug and medical device corporations would get a total tax cut of at least $180 billion over 10 years. The richest 400 families would each get about a $7 million tax break a year, according to the Center on Budget and Policy Priorities.

"Now we can add a new $200 billion tax paid by workers on their employer-provided health insurance to the list of threats posed by the GOP's healthcare repeal efforts.

"Moreover, a new Kaiser Family Foundation analysis estimates that consumers will get 36% less in insurance premium tax credits in 2020, on average, under the GOP's ACA repeal plan. These credits are critical to help moderate-income families pay for health insurance. Kaiser found that under the GOP plan 'the average tax credit for current ACA marketplace enrollees would rise from an estimated $2,957 in 2020 to $3,729 in 2027. By comparison, the average tax credit under the ACA would be $4,615 in 2020, increasing to $6,648 in 2027.'

"These much less generous tax credits to purchase health insurance are the equivalent of a major tax increase on working families, and they are designed to partially replace the taxes being paid by the wealthy and big corporations under the existing ACA.

"The Republican plan would tax, for the first time ever, worker health benefits provided by their employers. Even workers who pay 100% of the cost of their own coverage under an employer-provided plan would be taxed. It's outrageous that Republicans plan to tax workers' health benefits to give huge tax breaks to those at the top and to prescription drug and insurance corporations.

"The ACA has expanded Medicaid and CHIP coverage to 13 million, made health insurance affordable for 9 million and strengthened Medicare in large part by asking the wealthy and healthcare corporations to pay a fairer share of taxes. Reliance on these funding sources has decreased economic inequality even as it improves the nation's health.

"Taxing working families' health care instead of asking the richest Americans and most profitable corporations to pay their fair share reverses the progress made by the ACA in narrowing the nation's income and wealth gaps."

ATF's estimate of $525 billion in tax cuts for the wealthy and healthcare corporations from ACA repeal is a very conservative estimate based on 2015 data from the Congressional Budget Office. The estimate is available here.

This ATF fact sheet compares the 30 million people who could lose health care coverage from an ACA repeal (including those affected by disruptions in the private insurance marketplace) with the those who would benefit from the $525 billion tax cut.