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ACA has got to be the largest tax increase ever foisted on the middle class. We already have a progressive tax, but let's add an individual mandate, tax credit

by zaroth 10y ago

ACA has got to be the largest tax increase ever foisted on the middle class. We already have a progressive tax, but let's add an individual mandate, tax credits that phase out at 400% FPL, and cost sharing subsidies which phase out after 250% of FPL. The maximum value of the tax credits for your family would be nearly the full cost of the premiums at 133% FPL, let's say $12,000. Then on top of that the cost sharing reductions would reduce your out-of-pocket maximum -- which if you're truly unlucky could run your family another $14,300 -- to a maximum of $4,500, so that's worth potentially another $10k. What this means is ACA is a $12,000 - $22,000 tax on your family depending on your health care utilization, as income rises from 133% - 400% FPL. For a family of 4 the 133% FPL = $32,250 and 400% = $97,000. So as you make that extra $64,750, in addition to all the other taxes you are paying, you are also phasing in $12,000 - $22,000 of increased payments for the same exact health care. Now that is one hell of a tax. So while you and your spouse are working your asses off to earn $150k, you can look back and appreciate how $10k went to the town, $10k to the state, $30k to the Fed and ~$15k to the SSA. So it's really just the cherry you're being charged an extra $15k for insurance, come on, you can afford it! I won't mention all the other subsidies you lose out on for being a productive member of society. Because when you realize the real tax rate approaches 100% on the first $97,000 it's a bit of a buzz kill.

grandalf 10y ago
Very true. And all that extra money is helping to fund companies like Mylan when they overprice the epi pen for several years. Why wouldn't they, customers are insulated from the sticker price but can't really complain because high priced health "insurance" is required. It's just a coincidence that Mylan took any flak for its abuse of the system. Many other pharmaceuticals are increasing in price way out of proportion to inflation, and way out of step with reality since the R&D costs are all borne before product launch.
timr 10y ago
"ACA has got to be the largest tax increase ever foisted on the middle class." That's just Not Even Wrong. Your health insurance premium is not a "tax". You're getting health insurance. Moreover, not getting a subsidy for your health insurance is also not a tax. You can only use that logic when the tax credit is offsetting another tax. Which it isn't. It's offsetting your health insurance bill. If, instead, you're trying to claim that every bit of increase in health insurance costs since the ACA is a "tax", that's maybe a bit more defensible, but still Wrong. Health insurance costs have been skyrocketing for decades. The ACA has probably slowed down that trend. Finally, if you're just complaining that you're healthy but you have to pay for health insurance now...take a walk, please. Eventually, we all get sick. Health insurance only works if healthy people foot the bill of the sick people. That's how insurance works.
- zaroth 10y ago
  It's simple economic fact that a subsidy or other government benefit which decreases as your income increases is exactly the same as an income tax. It's called "Effective Marginal Tax Rate" if you want to Google it. From the CBO; "The effective marginal tax rate (for brevity, hereafter referred to as the marginal tax rate) is the percentage of an additional dollar of earnings that is unavailable to an individual because it is paid in taxes or offset by reduced benefits from government programs." I mean, it seems almost ridiculous to say that buying health insurance & health care is a tax, but when the government is paying over a trillion dollars a year to buy health care for everyone except those who are too young or earning too much money, that's exactly what it's become. And I'm definitely not complaining that healthy people should not have to pay for health insurance. In fact the healthiest 50 percent of people who pay for health insurance use only 3.5 percent of services, it's what allows the entire system to work!
  - timr 10y ago
    Health insurance is not a government benefit, unless you're on Medicare or Medicaid. Your health insurance premium is not a tax. It doesn't go to the government. Being required to pay for a service doesn't make that service a tax. The only thing about the ACA that has been characterized as a tax is the penalty you pay if you don't buy insurance.
- chimeracoder 10y ago
  > Your health insurance premium is not a "tax". You're getting health insurance The difference between your risk-adjusted premiums (based on your lifetime expected payouts + margin and overhead) and the amount that you actually pay in premiums can best be described as a "tax", because if it is positive, that money is directly going towards subsidizing someone else's premiums, and it is mandated by the government. You can make the argument that it's the right thing to do because it allows people to purchase insurance that they otherwise would be unable to afford, based on their expected risk level (ie, past health) and their current income, but it's important to understand that that's not the way insurance itself works. The insurance is simply being bundled together with that tax, so you only see the one price at the end, instead of having it broken down and itemized.

by zaroth 10y ago

grandalf 10y ago

Very true. And all that extra money is helping to fund companies like Mylan when they overprice the epi pen for several years. Why wouldn't they, customers are insulated from the sticker price but can't really complain because high priced health "insurance" is required. It's just a coincidence that Mylan took any flak for its abuse of the system. Many other pharmaceuticals are increasing in price way out of proportion to inflation, and way out of step with reality since the R&D costs are all borne before product launch.

timr 10y ago

"ACA has got to be the largest tax increase ever foisted on the middle class." That's just Not Even Wrong. Your health insurance premium is not a "tax". You're getting health insurance. Moreover, not getting a subsidy for your health insurance is also not a tax. You can only use that logic when the tax credit is offsetting another tax. Which it isn't. It's offsetting your health insurance bill. If, instead, you're trying to claim that every bit of increase in health insurance costs since the ACA is a "tax", that's maybe a bit more defensible, but still Wrong. Health insurance costs have been skyrocketing for decades. The ACA has probably slowed down that trend. Finally, if you're just complaining that you're healthy but you have to pay for health insurance now...take a walk, please. Eventually, we all get sick. Health insurance only works if healthy people foot the bill of the sick people. That's how insurance works.

zaroth 10y ago
It's simple economic fact that a subsidy or other government benefit which decreases as your income increases is exactly the same as an income tax. It's called "Effective Marginal Tax Rate" if you want to Google it. From the CBO; "The effective marginal tax rate (for brevity, hereafter referred to as the marginal tax rate) is the percentage of an additional dollar of earnings that is unavailable to an individual because it is paid in taxes or offset by reduced benefits from government programs." I mean, it seems almost ridiculous to say that buying health insurance & health care is a tax, but when the government is paying over a trillion dollars a year to buy health care for everyone except those who are too young or earning too much money, that's exactly what it's become. And I'm definitely not complaining that healthy people should not have to pay for health insurance. In fact the healthiest 50 percent of people who pay for health insurance use only 3.5 percent of services, it's what allows the entire system to work!
- timr 10y ago
  Health insurance is not a government benefit, unless you're on Medicare or Medicaid. Your health insurance premium is not a tax. It doesn't go to the government. Being required to pay for a service doesn't make that service a tax. The only thing about the ACA that has been characterized as a tax is the penalty you pay if you don't buy insurance.
chimeracoder 10y ago
> Your health insurance premium is not a "tax". You're getting health insurance The difference between your risk-adjusted premiums (based on your lifetime expected payouts + margin and overhead) and the amount that you actually pay in premiums can best be described as a "tax", because if it is positive, that money is directly going towards subsidizing someone else's premiums, and it is mandated by the government. You can make the argument that it's the right thing to do because it allows people to purchase insurance that they otherwise would be unable to afford, based on their expected risk level (ie, past health) and their current income, but it's important to understand that that's not the way insurance itself works. The insurance is simply being bundled together with that tax, so you only see the one price at the end, instead of having it broken down and itemized.