Today’s Managing Health Care Costs Number is $248 billion
Source. Calculations assuming 36 million households per quintile
The Congressional Budget Office periodically reviews tax expenditures. The three largest tax expenditures are the employer sponsored health insurance deduction, which costs the treasury around $248 billion a year, the deduction for state and local taxes, which costs the treasury about $80 billion a year, and the mortgage deduction, which costs the Treasury about $70 billion a year To put this in perspective, the federal government spends $546 billion annually on Medicare.
Tax expenditures often disproportionately benefit those with high incomes. High income workers pay more taxes – so they are more likely to get tax breaks. This is true of the employer sponsored health insurance tax deduction – it’s worth on average over $5000 for high wage (top 5%) households, but only $827 for the bottom quintile.
Low income workers’ payroll tax liability is often largely Social Security and Medicare taxes, and not income taxes. The Earned Income Tax Credit, and the ACA subsidies for exchange based health plans are exceptions – these benefit low wage workers. The ACA subsidies are projected to cost $110 billion in 2016. They are also tax ‘credits,’ not tax ‘deductions.’ Seems like an arcane difference –but there is a big impact on health care policy.
Many of the “Obamacare repeal and replace” plans do not offer tax credits –but rather offer tax deductions. These are worth dramatically less to low wage workers, and any plan that does not offer tax credits is likely to lead to a much higher uninsured rate among low wage workers.
