Republicans in Congress have already voted to cut the taxes that pay for the Affordable Care Act (ACA). Up to now these tax cuts have been vetoed by President Obama. But with the inauguration of Donald Trump, Republicans in the Senate and House will be free to cut ACA taxes and give hundreds of billions of dollars to the richest Americans.
The ACA taxes include a 3.8% tax on investment income, which mainly goes to the top 1%. Investment income is not taxed to pay for Medicare or Social Security. There is also a 0.9% tax on individuals with very large salaries, which is also not taxed to pay for Social Security. Social Security taxes only tax the first $127,200 in earned income; any income above that or investment income is not taxed.
What this means is that eliminating the taxes for the ACA would provide the top one-tenth of one percent (0.1%) of Americans an average tax cut of almost $200,000 a year, which would be almost 75% of the total dollar tax cut.
These ACA taxes on households raise about $100 billion a year, which along with ACA taxes on health insurance companies, drug and medical equipment manufacturers, and others, pay for ACA. One cost of the ACA are the premium tax credit where the federal government will reimburse low and middle-income households that purchase health insurance through a government exchange for all or part of their health insurance premiums. Another cost is the expansion of Medicaid for low-income Americans.
The elimination of the ACA and the premium tax credits which subsidize the government insurance exchange would cause dramatic losses for about 4% of the population, who would lose insurance subsidies that average almost $5000 each year. While most the poorest 20% of American households, earning less than $25,000 per year, would not see much of a loss in subsidies, they are the ones who are most likely to lose insurance with the elimination of the ACA and its expansion of Medicaid. Eliminating the Medicaid expansion could cause almost 11 million to lose their insurance.
It is no wonder that the wealthiest businesspeople and Wall Street tycoons who are represented by billionaire President-elect Donald Trump are so keen to eliminate the ACA. But their gains would come at the cost of higher health insurance premiums and loss of health insurance for millions of workers and small business owners.