M.A.P.: BDN Tax Editorial Makes Flawed Apples to Oranges Comparison

Outlet: Bangor Daily News
Date: June 29, 2012
Topic: ACA Taxes
Author: Editorial
Analysis: Fails to disclose critical information on numerous tax increases in ACA, resulting in flawed comparison

Bangor – A MAP review of the Bangor Daily News editorial published on June 29, 2012 titled Republicans discredit their own health insurance overhaul with attack on Obama’s planⁱ exposes flaws in the overall discussion by the BDN Editorial Staff of the tax implications of the Affordable Care Act.

Missing from the editorial, which presents itself as a comparison of the tax implications and rhetorical contrast between the 2011 Maine health insurance overhaul and the Affordable Care Act, is any discussion of the large number of taxes not related to the individual mandate.

By comparing the Affordable Care Act individual mandate tax of $695 – $2085/year to the $4/month assessment put in place by P.L. 90 in Maine, in which health insurers pay a $4 assessment per insured person essentially to themselves to fund a high risk poolⁱⁱ, the BDN editorial presents only one small piece of the picture.

Three of the 20 other tax hikes imposed by the Affordable Care Actⁱⁱⁱ include:

Medical device manufacturing tax – a 2.3% tax on medical device manufacturers, including medical device manufacturers in Maine.

Medical bill deduction threshold – previously, Americans whose medical expenses exceed 7.5% of their personal income were allowed to deduct expenses that exceeded the 7.5% threshold. The Affordable Care Act raises this threshold to 10%, meaning that many Mainers, particularly those who are near retirement, will lose a significant tax deduction and pay higher taxes, even as their medical expenses consume nearly 10% of their income.

Changes to Flexible Spending Account limits – Flexible Spending Accounts, which can be used to pay for qualifying medical expenses, are used by Americans to save & pay for medical needs over time, rather than face the sudden & severe consequences of large medical bills. The Affordable Care Act caps the limit of these accounts to $2,500 per year, limiting the ability of Americans to prepare for medical expenses and taking more than $13 billion more in revenue from individuals and families who use these accounts.

To present a full & complete picture of the difference between the Affordable Care Act and Maine P.L. 90 Health Insurance Reform, the BDN should have explored the numerous tax increases in the Affordable Care Act.

Instead the BDN cherry-picked one of many of the Affordable Care Act taxes and drew a tenuous comparison between the individual mandate tax in the Affordable Care Act, which is collected by the IRS from individuals as a penalty for not purchasing insurance, and an assessment paid by health insurance companies into their own high risk pools.

Further, while the BDN briefly touched upon the fact that the P.L. 90 assessment was lower than the Dirigo tax that had been repealed, thus making the P.L. 90 a net tax reduction, they failed to include the various new and increased taxes in the Affordable Care Act to make a similar comparison. In short, the BDN editorial made an apples to oranges comparison to support the argument it wanted to make.

Read or download the full report with sources here.

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