Mar 7, 2017

Obamacare replacement pads paychecks of health insurance executives

Charles Dharapak / AP

The Republican Obamacare replacement eliminates the industry taxes on medical device companies, health insurers and tanning salons. But starting in 2018, it also axes the provision that capped the annual corporate income tax deductibility of compensation at $500,000 for any health insurance CEO, executive or employee. If the bill passes, the deduction limit would go back up to $1 million.

Why this matters: The provision was a tiny part of Obamacare, but it was a source of revenue that helped pay for the health care law. The Joint Committee on Taxation expected it to generate $600 million through 2019. Eliminating the tax deductibility limit piles onto the daunting question of how Republicans would pay for this replacement. The move, which reinstates a corporate tax break for wealthy insurance executives, also doesn't do anything for low-income or middle-class people and will be an easy target of Democrats.

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