Obamacare’s Tax on Success
The Associated Press is out with a story this morning outlining just one of the ways in which Obamacare discourages work. This article is in many respects a complement to last week’s AP story, which noted that millions of early retirees earning as much as $64,000 per year could receive free taxpayer-funded health insurance. That’s because Obamacare’s formula for calculating Medicaid eligibility excludes Social Security benefits, so early retirees between the ages of 62 and 65 can earn tens of thousands of dollars in Social Security pensions and not have a dime of that money count as income.
That same definition of income also applies to insurance subsidies in Obamacare’s Exchanges – so early retirees who make most of their money from Social Security benefits would qualify for much richer subsidies than those who are still working, because the former would not qualify as income under the Obamacare rules. The AP story notes one example in which an individual who continues to work full-time would pay 50 percent more for premiums than an individual working only part-time.
The reactions in the article themselves are illustrative:
- One consultant noted that the formula means “If you get a job for 40 hours a week, you’re going to pay more for your health insurance than if you don’t get a job.”
- The report also quoted Administration officials who “said the administration is concerned because the situation could create a perception that some people are getting a worse deal compared with their less-industrious peers.”
The problem is that it’s not a perception that people who work are getting a worse deal – it’s a fact. And it’s not a new development either:
- Speaker Pelosi celebrated the law precisely because people “can leave your work” and go “be creative and be a musician or whatever;”
- The Obama Administration’s Solicitor General defended the controversial individual mandate in court by saying that individuals could avoid the mandate by choosing to be poor: “I guess one could say…someone doesn’t need to earn that much income;”
- The Congressional Budget Office noted that the law will reduce the labor supply by 800,000 jobs, because “the phaseout of the subsidies as income rises will effectively increase marginal tax rates, which will also discourage work.”
Speaker Pelosi famously said we had to pass the bill to find out what’s in it. Once again we find another way in which Obamacare discourages work, productivity, and innovation at a time of sluggish growth and record high unemployment.