The Effects of ACA Taxes and Subsidies
This session examines the effects of incentives from various taxes and subsidies in the Affordable Care Act (ACA). The first paper examines how taxpayers responded to implicit taxes in the subsidy schedule for insurance purchased through ACA Marketplaces. Using data from tax returns filed in 2013-2014, the authors find that taxpayers bunch at the cliff point for Marketplace subsidies (400% of the federal poverty level) primarily by increasing contributions to IRA accounts, though the amount of bunching is relatively small. The second paper examines the incidence of the excise tax on high-cost health plans and the extent to which employers could avoid the tax by reducing the generosity of benefits in plans they offer to their employees. The authors simulate the incidence of the tax for single plans, and examine the potential impact of IRS treatment of non-self coverage as a weighted average of employee-plus-one and family plans. The last paper examines how individual provisions in the ACA (e.g., exchange subsidies, individual and employer mandates, the excise tax on high-cost health plans and the Medicaid expansion), as well as the sum of their parts, may affect labor supply and aggregate welfare. The authors measure the income and substitution effects in the context of a general supply and demand framework using data from the Census Bureau and the Bureau of Labor Statistics, as well as official revenue and insurance coverage estimates from the Joint Committee on Taxation and Congressional Budget Office.