Are Democrats right when they say that the Senate health-care bill is a tax cut for the rich at the expense of the poor? Kind of.
The bill Senate Republican leaders released Thursday cuts subsidies that lower-income Americans use to purchase health insurance through online Obamacare marketplaces. It also makes deep cuts to Medicaid, the federal government's health-care program for the poor. Meanwhile, it funds a substantial tax cut for the wealthy and the health-care industry, Republicans say, in an effort to spur economic growth.
The subsidy cuts would fall hardest on older, lower-income Americans, who could see their own contribution toward their premiums nearly double and their other out-of-pocket costs, such as deductibles, skyrocket. And at the end of the day, their plan would cover less while they pay more.
Here's how this would work: Obamacare's subsidies are structured so that people under 400 percent of the poverty line — about $42,000 for an individual or $98,400 for a family of four — pay a certain percentage of their income toward a midrange silver plan, which is the benchmark plan used to calculate subsidies. The government pays the rest of the premium.
The Senate bill would calculate subsidies based on the cost of a lower-end bronze plan, which is less comprehensive than a silver plan, according to Matthew Buettgens, a researcher at the Urban Institute. The bill would allow states to further narrow what a plan must cover to be considered “bronze.” Meaning, lower-income people could get less coverage and less subsidies to pay for that coverage.
But these narrower plans could also cost more for some people, especially older Americans. The Senate bill increases how much income older people must put toward premiums, but decreases it for younger people. (For the poorest people, their contribution is relatively unchanged.)
Speaking of low-income people, this Senate bill would also cut the subsidies that help people below 250 percent of the poverty line afford their deductibles and copays. Without that help, those people could be facing deductibles on the order of $7,000 — over a quarter of their income — according to Buettgens.
The bill faces a tough fight in the Senate, where Republican senators have already begun to announce their opposition, both because it doesn't go far enough in cutting federal help for health care, or because it goes too far.
Even if this bill passes the Senate — at most two Republican senators can vote ‘no’ — it will be reconciled with the House’s bill, another tough fight, before being sent to President Trump’s desk.
Correction June 23, 2017: A previous version of this article mistakenly stated Medicaid was the health-care program for seniors. It's, rather, for low-income Americans.