Saturday, March 11, 2017

Lottery Losers Under the GOP Bill

The GOP American Health Care Act (AHCA) has six pages on how to punish lottery winners, and after thinking this was just a waste of paper, I thought it worth looking at. It's not a critical part of AHCA, but it gives us a shabby little window into the Republican mindset and their contempt for the poorest.

The poorest third of our country's population buy half thelottery tickets and many of these are likely to be on Medicaid, so it makes sense that the GOP would cast their gaze in this direction while scribbling their version of a health care bill.  Let's take a hypothetical target for this part of the bill, a single guy who lives in Columbia County who works at local box store and makes $16,000, which is 138% over the poverty level. His schedule is uneven at work and he doesn't get any health benefits but he's eligible for New York's expanded Medicaid program. The guy is always broke, so he spends about $700 a year on lottery tickets (which is roughly the annual average that a person spends on tickets in the Northeast).  For him this is an investment of 4.3% of his annual income.  This year he gets lucky and wins $90,000.  But he faces taxes of about 45% so he really only ends up with $40,500. And with all that extra wealth, he gets dropped from Medicaid, which he can never qualify for again under the new GOP bill.

And wait, the GOP throws in one more thing! At the end of the AHCA's very long section on lotteries, someone tacked in a tiny provision that could make life just a little more difficult for our poor winner.  Let's say the guy had a hernia operation the year before.  In the bill, the state can, if it wants, take those lottery dollars to reimburse itself for his previous medical costs. End of money.  End of coverage forever. (I don't think New York would do that, but it can, and you never know…)

So, now, let's look at a happier scenario: a rich banker who bets on the stock market (not much different from the lottery) and is also a winner. This man makes an income of $2,300,000 and he invests $100,000, which is also 4.3% of his income. He, too, gets really lucky and after a few years nearly doubles his investment. He cashes out and, like our lottery winner, gets an extra $90,000.  The banker's capital gains tax on that money, however, is only 20%, or $18,000, so he comes home with $72,000, instead of the $40,500 his poorer fellow gambler made. The banker is still making over $2 million a year, and no one is taking away his health insurance and asking him to cough up his winnings to pay back medical bills.

The GOP would argue that this rich guy is contributing to the economy!  He's helping to create jobs! Some experts make the point, however, that investors don't actually create jobs.  They are important in seeding a business, but once it gets going that business creates jobs only if it has enough customers to pay for them.  The rich banker has nothing to do with that.  In fact, as he and his friends are getting richer, the middle class that serves as the pool for those customers is getting poorer.

Now let's look at our lottery ticket buyer again and where his investment goes. He's creating jobs, too. In a 2009 study, lotteries provided more revenue than state corporate-income taxes in 11 of the 43 states where they were legal. The New York state lottery contributed $3.3 billion dollars in 2015-2016 to the public school system; Columbia County schools alone got over $5.7 million in 2012.  That creates a lot of jobs right there. And these jobs are helping kids. So, our lottery winner really has contributed far more to the economy relative to his income than our banker, and yet he ended up losing both his money and his health coverage. 

Everything about this bill smells of Republican contempt for the poor. 

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