When I posted about Senator Cruz’s health insurance last week, I did not have all the relevant information, something I admitted in the post. Since then, some readers and Adrianna have brought some of the missing information to my attention. This is an update.
- Goldman Sachs, where Mrs. Cruz is a managing director and the source of the family’s health insurance, offers coverage that cost $40,543 in 2009, according to the New York Times.*
- That same figure shows up in this SEC filing for the company.
- According to the Texas Tribune, Senator Cruz had an adjusted gross income of $2 million in 2010. In 2009, the Senator’s taxable income was $659,000. The article documents income for other years.
- Taxable income at that level was associated with a 35% federal marginal tax rate in 2009. (It’s higher today.)
- Income at that level does not incur a Social Security tax. (The 2009 cutoff was $106,800.)
- The Medicare tax rate is 1.45%.
- Texas has no income tax.
Plugging and chugging with these numbers (formula here), I compute that the “tax price” of Senator Cruz’s health insurance is about 64%. In other words about 36% of his health insurance premium cost would be government tax revenue if employer-sponsored health insurance were taxed like wages. That’s $14,595.*
A typical, able-bodied, adult Medicaid beneficiary costs government $3,000. In other words, Senator Cruz’s health insurance tax subsidy could fund Medicaid coverage for almost five such adults.*
For the record, I also receive a tax subsidy, though a smaller one than Senator Cruz. I earn much less and have a much lower health insurance premium. (I can’t imagine what a $40,543 premium covers.) Neither he nor I are doing anything wrong by receiving this subsidy. We’re both entitled to it under the law. I am in favor of revoking, or phasing out, this tax subsidy for him, me, and everyone. The Cadillac tax is a good start, though crude.
I do not know Senator Cruz’s position on this policy issue. The first step is recognizing the size and scope of this subsidy. Too few Americans, including his spokeswoman, are aware of it.
* It has been raised in the comments that the Cruzes may, in fact, have a $20k, not a $40k policy. The comment is unsubstantiated (no links). However, to be (overly?) fair, let us presume it to be true for a moment. If so, then divide the figures I’ve noted with a “*” by two. The broader point still stands, the employer-sponsored health insurance tax exclusion costs a lot. Such insurance is not free of assistance by taxpayers.