Concealed within the 123 pages of legislative verbiage and dense boilerplate of the House Republican bill repealing the Affordable Care Act are not a few hard-to-find nuggets. Here’s one crying out for exposure: The bill encourages health insurance companies to pay their top executives more.
It does so by removing the ACA’s limit on corporate tax deductions for executive pay. The cost to the American taxpayer of eliminating this provision: well in excess of $70 million a year. In the reckoning of the Institute for Policy Studies, a think tank that analyzed the limitation in 2014, that would have been enough that year to buy dental insurance under the ACA for 262,000 Americans, or pay the silver plan deductibles for 28,000.
As part of an effort to rein in soaring executive pay, the ACA decreed that health insurance companies could deduct from their taxes only $500,000 of the pay of each top executive. That’s a tighter restriction than the limit imposed on other corporations, which is $1 million per executive. The ACA closed a loophole for insurance companies enjoyed by other corporations, which could deduct the cost of stock options and other “performance-based” pay; for insurance companies, the deduction cap is $500,000 per executive, period.
The idea was to signal that the ACA, which cemented health insurance companies into the center of American healthcare, wasn’t a pure giveaway to the industry.
Some might say that the executive pay limit on insurers turned out to be a bad bargain, considering how much the companies have been whining about ACA-related losses. But that would be incorrect. As we’ve reported in the past, the major insurance companies have actually made a mint from Obamacare — though perhaps not on the individual insurance exchanges. Their profits have come from the expansion of Medicaid, in which the largest insurers play a major role.
Read the whole article in the LA Times