Overturning the Affordable Care Act Would Give Billions to Wealthy Americans
The Supreme Court will hear arguments about whether to invalidate the Affordable Care Act (ACA) on November 10, and Republicans are rushing to confirm the justice who will likely help overturn it.
In addition to stripping healthcare from millions and removing protections for people with pre-existing conditions, invalidating the whole law would create a large transfer of wealth from low- and middle-class Americans to the richest Americans.
The ACA provides tax credits for individuals and families to help them purchase insurance plans. The average credit is around $500.
Those credits are paid for through taxes on investments for high earners, a 0.9% Medicare tax on individuals who earn over $200,000 a year, and the Branded Prescription Drug Fee, which is an excise tax paid by pharmaceutical companies. Eliminating that tax would take $2.8 billion dollars from families per year and return it to pharmaceutical companies.
Repealing the ACA would also repeal all these taxes and eliminate the tax credits families use to be able to afford their insurance.
The Urban-Brookings Tax Policy Center estimates that the repeal of the ACA would save the wealthiest Americans $35 billion to $40 billion in taxes every year. The Republican “plan,” therefore, literally takes money from lower-income Americans in order to give it to the wealthy — all while millions lose access to care.
In contrast, the Biden Plan will eliminate the income cap on tax credit eligibility and lower the limit on the out-of-pocket cost of premiums. These changes would ensure that no family, regardless of income, would spend more than 8.5% of their income on insurance premiums, and every family would be eligible to apply for credits.
Additionally, Joe Biden plans to increase the amount of the tax credits paid to families by calculating credits based on the cost of a gold health insurance plan rather than a silver plan.
The wealthiest Americans have already made billions during the COVID-19 pandemic while others struggle to pay rent. Donald Trump’s plan just continues that trend.
And beyond forcing millions of Americans off their health insurance, a repeal of the ACA would bring a major tax cut for the richest Americans. According to research from the Tax Policy Center (TPC), the top 0.1% would receive a tax cut of $198,250 per year while the top 1% of Americans would see a tax cut of $32,370.
“We knew that repealing ACA would be a windfall for the wealthy,” Seth Hanlon, a senior fellow at CAP, told Yahoo Finance. “But the magnitude of the tax cut for the top 0.1% — people making $3.8 million and upwards — is still stunning.”
While millions of people stand to lose their insurance coverage without the health-care law, higher-income households would reap significant tax benefits.
They could save between $35 billion to $40 billion in taxes annually, according to Howard Gleckman, senior fellow at the Urban-Brookings Tax Policy Center.