So House Republicans have accomplished something remarkable: They have written a bill that would make every problem they’ve complained about much, much worse. If there’s any saving grace, it’s that almost no one will be happy about it, except for the wealthy people to whom it gives a gigantic tax cut.
And that’s the most concise summary of this bill: Republicans are going to take people’s health coverage and health security away while increasing their costs and doing enormous damage to the insurance market, all so they can give a tax cut to the rich.
There are so many awful things about this bill that it’s hard to fit them all into one post, so I’ll try to be as brief as I can. Let’s review the carnage:
The Republican bill undoes the ACA’s expansion of Medicaid. An estimated 14 million more Americans are insured due to the ACA’s expansion of Medicaid. The GOP bill maintains that expansion until 2020, at which point it revokes it, likely kicking millions off the program. Medicaid’s guarantee of coverage will be replaced with a “per capita allotment” and “flexibility” for the states, meaning they’ll be free to reduce benefits and remove people.
It replaces the ACA’s insurance subsidies with a tax credit. This is a far less efficient and effective way to help people afford insurance, but Republicans are more inclined to like it because they like tax breaks. There are a few problems with it, though. First, it’s much skimpier than the existing subsidies. The tax credit starts at $2,000 for a young person, rising up to $4,000 for those in their 50s and 60s. If you think that’s going to be enough to make health insurance affordable for low- to middle-income people, particularly older ones, you don’t know anything about health insurance in America.
And while the tax credits phase out for those at high incomes, before then (up to $75,000 for an individual and $150,000 for a couple) everyone gets the same amount. That’s in contrast with the ACA subsidies, which are tied to your income and the cost of insurance: They say you won’t have to pay over a certain percentage of your income, no matter what. If premiums go up, your subsidy goes up. That’s not how the Republican plan works: It just gives you a flat tax credit. If premiums go up — which they will — too bad.
It does away with the individual mandate, in a way that could lead the individual market to collapse. The ACA’s individual mandate wasn’t popular, but it was necessary to solve a key problem, which is that if you want to guarantee coverage for those with preexisting conditions, you need to spread costs as widely as possible. Get everyone into the risk pool, and you can do it. So the law required people to carry insurance, fining them if they don’t. The GOP plan says that if you maintain “continuous coverage” then you’ll still be insured despite your preexisting condition. If you go without insurance for two months, then you’ll have to pay a penalty once you start getting coverage again. But you’ll pay it to the insurance company, not to the federal treasury.
Here’s the thing, though. If you’re healthy, and especially if you’re young and healthy, this system actually incentivizes you to wait until you get sick before getting insurance. You can say, why bother with insurance now? Sure, I’ll have to pay a 30 percent penalty on my premiums when I buy coverage again, but only for the first year. If I can get away with 10 years of having no insurance, and only get it when I’m faced with high expenses, I’ll still come out ahead. If young people make that calculation en masse, the risk pool winds up confined to people who are older and sicker, premiums skyrocket, insurers flee and the whole thing collapses.
The Medicare trust fund will be drained sooner. Among the positive benefits of the ACA was to extend the life of the Medicare trust fund, which makes up the difference when payroll taxes fail to cover the full cost of the program. Repealing the taxes in the ACA will hasten the day when the trust fund is drained by four years, necessitating earlier changes to the program (i.e. cuts) or a tax increase. This is a feature, not a bug, of the Republican plan, because they look forward to using the depletion of the trust fund as a justification for cutting or privatizing the program.
It allows insurance companies to charge older people a lot more. The ACA allowed insurers to charge older customers more, but only three times as much as they charge younger people. The Republican bill allows insurers to charge older people five times as much (but, as you’ll recall, only gives them twice as much in a tax credit).
It gives a huge tax cut to the wealthy. The ACA was paid for in significant part with a tax increase on the wealthy, who in the years since seem to be doing pretty well despite such a vicious imposition on their freedom. The Republican plan repeals these tax increases; those making over a million dollars a year are in line for a tax cut averaging almost $50,000, and the richer you are, the more benefit you get. Those in the top 0.1 percent would get an average tax cut of more than $195,000.
Planned Parenthood is barred from receiving Medicaid reimbursements for a year. Of course it is. Because as long as you’re cutting back women’s Medicaid coverage, why not also tell them where they can and can’t get care?
So in sum, the Republican bill makes coverage more expensive and less comprehensive, will inevitably lead to fewer people with insurance, is particularly cruel to those with low incomes, and destabilizes the insurance market, all to give a tax break to the wealthy. That’s why Avik Roy, perhaps the leading conservative health-care wonk and a fierce critic of the ACA, wrote that the Republican bill reflects a “stubborn desire to make health insurance unaffordable for millions of Americans, and trap millions more in poverty.”
Well done, Republicans — this is quite an achievement.