thene: Naomi Hunter is very suspicious. (naomi)
thene ([personal profile] thene) wrote2017-04-14 09:35 am

There Is No Such Thing As Health Insurance; There Is Only Taxation, Applied Regressively

(I'm doing the #500Words challenge (<---I v much recommend) & figured I'd use the occasion to wax coherent on a few Issues etc. A lot of them will be on tax & economics bc I am tired of seeing the left concede arguments on tax and economics to innumerate blow-hards peddling just-so stories. You can pound the shit out of these people on economic issues. Call this the Stop The Left Being Scared of Math tour.)

You need to get health insurance. It's mandated now but you would need it even without the mandate; eventually, you're gonna need to go to the doctor. You are already paying for Medicare and Medicaid coverage as well. None of this stuff is optional.

One of the folks whose tax returns I do every year is a self-employed person who has an ACA plan. He is caught in the infinite loop in the tax code; his ACA premiums are linked to his income, which due to the Self Employed Health Insurance Deduction, is dependent on his health insurance premiums.

He recently acquired a new stream of income. It's probably going to lift him out of the range where he can claim ACA subsidies. I've run him a back of envelope estimate of how much extra tax he needs to pay on the new income. Due to losing that subsidy, he has to consider not only additional income tax, but also paying a larger health insurance premium. Not only that, but because it's tough to adjust an ACA plan mid-year, he will remit this extra insurance payment directly to the IRS. The effective tax rate on his new income is very high, and you cannot split the part of it that's due to taxation off from the part of it that's due to health insurance - they're literally the same thing.

There's a similar steep curve for a Medicaid claimant that's just had an income boost; they might be suddenly thrust onto the private market, either via a new employer or onto an ACA plan. A portion of their new income goes to covering this, because it has to. Like EITC, at present both Medicaid and the ACA subsidies are acting as negative taxes on poor-to-mid income people whose employers don't cover their healthcare. There's a steep curve if you rise out of the range where these negative taxes can be used to pull down the tax rate you pay. It's still not true that the poor don't pay taxes - they pay more state and local taxes than the rich in nearly all states and because most of them work, they pay a much higher rate of payroll taxes than most people on six-figure incomes do. And none of this is optional. It's mandated, and the bill would come due either way.

When someone talks about pulling health insurance from poor people or sick people, what they're describing is a massive tax rise applied specifically to poor people and sick people. I think the GOP are freaking out about the ACA right now because they know this, and are hoping that you haven't figured it out yet.
la_dissonance: grainy black and white photo of a woman making a silly face (Default)

[personal profile] la_dissonance 2017-04-14 01:56 pm (UTC)(link)
It piqued my interest when you tweeted about this the other day and it's really interesting to see it in longer form!

(this is __clay from twitter, btw)
la_dissonance: grainy black and white photo of a woman making a silly face (Default)

[personal profile] la_dissonance 2017-04-14 03:38 pm (UTC)(link)
hi :D :D

"the dopamine gutter of twitter" sure is some strong imagery, dang. I feel strangely compelled to check out this words thing now /o/

[personal profile] khronos_keeper 2017-04-14 03:04 pm (UTC)(link)
Thene! You're here!

And actually I was in this exact situation this time last year. I went from below poverty level to just barely above with my grad stipend, and got kicked from Medicaid. The NYS marketplace cheapest plan was somewhat over $2000/yr. I'm really lucky because I instead had the option of going for the slightly cheaper school health plan.

So yeah! There are so many ways in which even the preferable system now still fucks proportionally with the sick, poor, and young than with the rich.

It's... actually really bizarre, the way in which just being a certain band of "working class poor" automatically invokes ingrained financial and social mechanisms to make you really "earn your keep". Like, if you make just a little bit more, you aren't congratulated for making progress and given more access to resources, you're penalized for not working hard enough to get even better resources.