Thomas Barthold, chief of staff for the Joint Committee on Taxation, revealed the $400 million lost tax revenue estimate during the first day of review of the Obamacare replacement bill by the House Ways and Means Committee.
Barthold said that would be the total amount lost through 2026 if the bill became law this year.
If the bill is passed, Barthold said health insurers would be able to deduct up to $1 million of an individual executive's salary on their taxes, just like other types of U.S. companies.
But Rep. Lloyd Doggett, D-Texas, noted that the $1 million deduction cap only is on salary. Executive compensation that includes "performance pay" can, and routinely does, significantly exceed the amount of the salary for a CEO of a health insurer.
Doggett pointed out that the pay of Aetna's CEO is more than $17 million, and Cigna's chief executive tops $13 million. Most, if not all of their pay, could be written off as business expenses if the Republican bill becomes law.
"It could be $100 million, and it would still be possible" to deduct the full CEO compensation?Doggett asked.
Barthold answered, "It would be possible."
Committee member Rep. Brian Higgins, D-N.Y., said, "I don't think this provision is unjustifiable, and I think it's morally reprehensible."
The CEO of UnitedHealth, Higgins pointed out, alone made $66 million last year.
"We're sitting here talking about giving big insurance companies a tax break on the exorbitant compensation to pay their executives?" Higgins said. "We should repeal this provision and replace it with an admonishment to the insurance companies to get your salaries in line with reality."
That provision, however, represents just a small fraction of the approximately $600 billion in revenue it is estimated the government would lose if the GOP Obamacare replacement plan was implemented. Much of those costs would come from the repeal of ACA-related taxes, which disproportionately affect wealthier Americans.
"So, essentially, what we have here to kick off ... is a beginning of a huge giveaway to the very, very wealthy, a huge giveaway, and the silence from the other side I would think indicates deep embarrassment, if possible," Levin said, referring to Republicans on the committee.
"Six hundred billion, with the vast majority going to wealthy families. That describes so vividly the mistake with this bill, and will emphasize those who are going to lose their benefits and their insurance coverage, millions and millions, while billions are going to the very few," Levin said. "That's really what this all about."