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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.

Posted on March 6, 2017, at 9:40 p.m. ET

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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