An “unintended consequence” of Alabama Attorney General Luther Strange's plan to “wake up every morning & think up ways to sue President Obama,” may be to increase the tax bills of almost 120 thousand Alabama residents who are enrolled in the health insurance marketplace. As of January 16, 134,205 people in Alabama had purchased a plan and 89% of those receive some form of tax credit.
As we noted back in July, Strange signed Alabama on to a lawsuit that, if successful, will deny any tax credits to Alabamians who purchase ACA policies. What about that “no new taxes” thing the GOP is always promising? Grover Norquist's group, Americans for Tax Reform, doesn't mince words. From 2011:
“ATR opposes all tax increases on the American people,” the group said in a statement. “Any failure to extend or make permanent the tax cuts of 2001 and 2003, in whole or in part, would clearly increase taxes on the American people …. It is a violation of the Taxpayer Protection Pledge to trade temporary tax reductions for permanent tax hikes.”
Boehner quickly dismissed the notion that allowing the tax breaks to expire would be acceptable.
“I believe that would be raising taxes,” Boehner said. “I've never voted to raise taxes and I don't intend to.”
Many, many Republicans – including a bunch in Alabama (Luther Strange among them) – have sworn fealty to Norquist and his group. We can partially blame much of the state's budget problems on Norquist disciples. In 2012, the state budget shortfall was $182 million. In a few years, the party of “fiscal responsibility” has managed to increase it to almost $300 million for just this year.
In Alabama, we can give hundreds of millions in corporate welfare with virtually no oversight or controls. But the state Attorney General isn't focusing on weeding out possible fraud and abuse there. No: he's spending his time and state money trying to make health insurance less affordable for Alabama residents.
No doubt, you'll hear people offer the same, tired, retread arguments about people wanting “free stuff,” but tax breaks for purchasing health insurance are nothing new. Every single person with employer-provided health insurance gets a huge tax break. It's hidden from view, but it's substantial:
Despite the important role that the tax system plays in subsiding private coverage, the amount of the benefit received by individuals and families is often not well understood because the tax code is complex, and the value that families receive from tax exclusions and other tax subsidies can vary substantially with income and individual circumstances. Another complicating factor is that the largest tax incentive for private insurance — the exclusion of the cost of ESI — is an indirect subsidy that is never actually reported to the individuals and families who benefit from it. Many people with employer coverage are probably not aware that the federal and state tax exclusions for private health insurance provides them with a subsidy worth several thousands of dollars a year.
160 million people received federal health insurance subsidies well before Obamacare and those subsidies benefit higher income people far more than the lower income folks who benefit from Obamacare.
Obamacare insurance subsidies are expected to cost $1 trillion over ten years. An estimated 160 million people have employer-provided coverage, and tax subsidies for employer-provided coverage cost the federal treasury $200 billion in 2007.
Multiply that $200 billion by 10 years and the federal treasury takes a $2 trillion hit – twice the cost of ACA premium subsidies.
The Obamacare subsidies help right that wrong. It's not people getting “free stuff:” it's a small step towards leveling the playing field between the people who have employer-sponsored (& federally subsidized) coverage and those without it.
People without employer-paid coverage have been helping pay the freight for the other 160 million for a long time, and frankly, the whining coming from some in that group of beneficiaries is getting really, really tiresome.
If Luther Strange and his buddies are successful in the Supreme Court this year, he can take “credit” for hurting over 100 thousand Alabamians and many more people in other states.
Somehow, I think he'll leave that part out of his victory lap speech (if he gets the chance).