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How Much Does Ted Cruz's Goldman Sachs Health Care Plan Cost Taxpayers?

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WASHINGTON -- In an interview with The New York Times published Wednesday, Heidi Nelson Cruz, the wife of Sen. Ted Cruz (R-Texas), confirmed that the Senate's most famous Obamacare foe receives his health coverage through her job at Goldman Sachs. The value of the coverage, according to Goldman, is at least $20,000 per year.

Liberals, of course, relish the irony that a senator who enjoys high-end health coverage through an investment bank was also working to undermine a law aimed at extending coverage to the uninsured. Lest anyone call this hypocritical, a Cruz spokeswoman told the Times that the senator's Goldman plan "comes at no cost to the taxpayer."

Edward Kleinbard, former chief of staff on Congress’ Joint Committee on Taxation, says that's nonsense.

"Of course there's a cost to taxpayers," Kleinbard told HuffPost.

As with any family on employer-sponsored coverage, Heidi Nelson Cruz's health insurance essentially functions as untaxed income. Rather than pay her an additional $20,000 in salary, Goldman compensates her just as much through her health plan, which the Cruz family won't have to pay taxes on.

Assuming the Cruz family falls into the highest tax bracket -- generally a safe assumption for a Goldman managing director -- Kleinbard, like the economist Dean Baker, estimates that the $20,000 Goldman plan amounts to about $8,000 in taxes that the general public won't see.

"Instead of getting compensation in cash and then shopping for insurance, they're getting an $8,500 federal subsidy," Kleinbard said. "If Goldman said, 'Here's cash, go buy your own policy,' that would cost them $8,500 in federal taxes. By structuring it this way, Goldman has saved them $8,500."

"If we didn't allow the health care deduction they would get it in pay and then pay the top rate, plus Medicare tax on it," Baker noted in an email.

As Kleinbard has noted before in his writings on the health care law, the Cruz family's windfall here is not unique. The same subsidy applies to anyone on employer-sponsored coverage -- whether it's Kleinbard himself or Huffington Post reporters like this one -- though the subsidy is larger with the gold-plated health plans commonly found on Wall Street.

Kleinbard told HuffPost that it infuriates him when politicians lambaste tax subsidies through Obamacare for less well-off Americans when those politicians -- and anyone on employer-sponsored insurance -- already enjoy their own kind of health care subsidies. The tax savings through Cruz's employer plan, he notes, is likely bigger than the typical subsidies under Obamacare. The estimated $8,500 is also more than twice the average annual Medicaid payment for an adult in Texas, according to the Kaiser Family Foundation.

"For most people, in the Affordable Care Act, they're not getting federal subsidies as large as this," he said. "[Cruz] is the beneficiary of a large federal subsidy today, and while he's obtaining this he's not willing to make that available to lower-income, hard-working Americans who don't get health care."

Cruz's office did not immediately respond to a request for comment.

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