by Mish

At the heart of the matter is a redistribution scheme that punishes the middle class the most, and the wealthy the least, for the benefit of the poor.

As awful as Obamacare has been at its purported goal of making health care affordable, it has been unquestionably successful at one of Obama’s other primary goals: the redistribution of wealth. Unfortunately, the poor design of the redistribution function is one of the reasons Obamacare is failing.
As the Economist points out in “Healthy Dose of Redistribution“, Obamacare imposes new taxes and costs on the middle class to fund subsidies for low-income earners. Low-income people get Obamacare for almost free, while middle class families are required to pay full freight for the most expensive government health care plan in the world by far.

Varones took data from an Obamacare Subsidy Calculator and crunched the numbers for a married couple in their 50’s in San Diego.

He posted the Subsidy Data along with a chart that shows a huge drop-off in after tax income if you make too much money.

I copied his spreadsheet, and prettied up the chart a bit with data points and axis labels. This is what it looks like.

The above chart is for a couple in San Diego. It reflects the price of a typical “silver plan” and Obamacre subsidies at various gross income levels.

Thanks to Obamacare, it is better for the average childless couple in California to make $63,000 than $72,000. Things are really horrendous if someone makes $64,000.

Taking Obamacare, federal, and state taxes into consideration, a couple that makes $63,000 annually takes home $48,770. A couple that makes $64,000 takes home $42,360!

Varones calculates the marginal tax rate of that extra $1,000 in income to be 741%.

The income level at which the cliff happens varies by family size and place where one lives. The cliff happens at $98,000 for a family of four in Omaha. Everyone has a cliff at some income level.

Varones finishes appropriately “The cliff is likely to get even bigger with the Huge Obamacare Premium Increases expected in 2017. This will not end well.”

Thanks to Obamacare, it is frequently better for a middle class family to get no raise than even a decent sized raise.

The wage point varies, but many will say “Dear employer, please don’t pay me more. It will cost me a lot of money”.

Mike “Mish” Shedlock

Obamacare Replacement an Impossible Nut to Crack

Obamacare replacement looks all but dead in the Senate. If by some magic it passes the Senate, it will still have to meet House approval.

Aetna Admits Obamacare in “Death Spiral”: Can Trump Fix This Mess?

Earlier this week, Aetna’s CEO admitted something most of us knew long ago: Obamacare Markets are in a ‘Death Spiral’.

Obamacare on Death Bed as Enrollment is Half the Expected Rate (the Unprofitable Half)

Obamacare is facing the hard knocks of reality. Selling overpriced insurance to the healthy and underpriced insurance to the sick is not a good model for insurance companies.

Will Tax Reform Fare Any Better Than Obamacare Reform?

Now that Obamacare is dead and buried, at least for the near future, all eyes are on tax reform.

Record 29% Say Obamacare Hurt Their Finances; Overall Only 44% Positive on ACA

As more and more “features” of Obamacare kick in, and as prices soar while coverage shrinks, mood sours on Obamacare.

Move to Repeal and Replace Obamacare Underway: Only 50 Senate Votes Needed

At long last, Republicans have unveiled a plan to replace Obamacare. To do so, they will need nearly every Republican vote.

McCain to Reverse Obamacare Vote Provided the Governor of Arizona Agrees

An Obamacare repeal is back in play as McCain Signals He’s Now a ‘Yes’, provided the governor of Arizona agrees.

Anthem Drops Obamacare in Ohio: 300,000 Without Insurance? Gruber Strikes Again

House Speaker Paul Ryan’s attempt to replace Obamacare was sheer madness. Left alone, Obamacare was imploding anyway. Republicans should have waited for Democrats to beg them to “do something”.

Obamacare Replacement Postponed: New “Final Offer” Coming

The Obamacare replacement vote has been postponed. There are conflicting reports on when a vote will next take place.