The Republican Health Care Plan Includes A Tax Break For Insurance CEOs

Insurance industry execs are getting a new tax break on salaries above $500,000 as part of the Republican plan to replace Obamacare.

Yuri Gripas / Reuters

WASHINGTON — The Republican plan to replace Obamacare includes a tax break for insurance company executives making over $500,000 per year.

Companies can generally deduct employee salaries as a business expense but in 2013 the Affordable Care Act capped the deductions on health insurance executive salaries at $500,000.

The average compensation for top health insurance executives is in the millions. In 2014 the left-leaning Institute for Policy Studies found that this cap generated $72 million in additional tax revenue.

But that cap is being eliminated in the new American Health Care Act unveiled Monday by Republicans. That means the more health insurance companies pay their executives the less they will pay in taxes.

"Unlike Obamacare, our legislation doesn't include policies that discriminate against specific industries," said a Republican aide.

The policy is a win for the health insurance industry and arguably a surprising move for Republicans after they frequently condemned the industry in the Obamacare debates.

"The insurance industry got us into this mess and I think they're going to have to pay the price for it," Rep. Raul Labrador said recently.

Sen. John McCain said he didn't even want to hear the industry's proposals after they supported the Affordable Care Act. "They have no relevance to me. I don't want to hear from them," he said.

In cases like Cigna CEO David Cordani or Aetna CEO Mark Bertolini, both of whom have hit annual remuneration of over $17 million, the new tax savings on their salaries would be substantial.

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Other perspectives on this story

• 1 Lots of people are very angered by what they consider to be Republican lawmakers putting corporate interests above citizens.
• 2 Many see this as confirming systemic inequalities in America's political and economic systems.
• 3 Some argue that this plan is not only worse for everyday Americans, but for the insurance companies, too.
• 4 This Reddit user thinks this is a way for Republicans to appease insurance companies that liked the ACA.
• 5 Some people think this makes sense, and brings health insurance compensation laws into parity with other insurance industries.
• 6 Some say this is a sign that American needs single-payer universal government health insurance.

• 1
  1/6

  “Making money off of murder. Awesome. Good job, guys. Keep up the horror and hate. The amount of indifference to suffering is staggering.”

  @McFlyCahill90
• 2
  2/6

  “America has socialism for the ultra rich and rugged capitalist individualism for the working class.”

  Matias
• 3
  3/6

  “I strongly suspect many insurance companies are not so thrilled about having this 'ability' and the blame and public ill will that will come with it. I'd guess that most would rather have had the mandate, which is the reason they supported ACA. Any way you cut it, the mandate was, and will likely prove to be, the only way to provide affordable insurance to the greatest number of people.”

  user/BillyJoeMac9095
• 4
  4/6

  “This is simply a bribe to obtain support from insurance companies for the new plan.”

  user/unsureofwhatiwant
• 5
  5/6

  “I don't really have a problem with this. They are not really giving a tax break for insurance CEOs, they are removing penalties specifically placed on insurance CEOs with Obamacare. A business should be able to deduct the cost of their CEO's salary, and the CEO pays taxes on their salary. Pretty clear double taxation IMHO. Why should insurance CEOs have different rules than CEOs from oil companies, or software companies, or Trump companies?”

  user/jmcdon00
• 6
  6/6

  “One Plan. One People. Insurance companies make plenty of profits from our auto, home, life, and commercial lines of insurance. They don't need to be involved with our medical programs.”

  David

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