Millionaires will simply adore the ObamaCare repeal
Hidden in the Republican plan: A giant handout to the wealthy
There are many reasons why Republicans are desperate to repeal ObamaCare. They think it represents government overreach. They want to eradicate Barack Obama's signature legislative achievement. Some even believe that whatever they replace it with will be more efficient and effective at providing insurance for Americans. But there's another reason behind their zeal, one that doesn't get talked about very much: Repealing and replacing the Affordable Care Act, at least the way they want to do it, would be a gigantic gift to the wealthy.
Stay with me here while we get a little wonky. The first thing to understand about the ACA is that much of its benefits went to poor and middle-income Americans, financed in large part by taxes on the rich. The single most important thing the ACA did was expand Medicaid, in an attempt to insure everyone who earns up to 138 percent of the poverty level (a little under $34,000 for a family of four). As a result, the program has expanded dramatically, with as many as 14 million new enrollees who wouldn't have had coverage otherwise. And that's despite the fact that 19 Republican-run states refused to accept the expansion, leaving out an estimated 4.5 million more who are now without insurance because their governors and state legislatures wanted to give Obama the finger.
The idea of the ACA was that the government would provide coverage at no cost to those people, then give substantial subsidies to people in the next rung up the economic ladder to buy private insurance. There are now about eight million of those, who get substantial subsidies.
Of course, the ACA did a lot of other things too, like outlawing denials for pre-existing conditions, moving away from the fee-for-service payment model in Medicare, and closing the prescription drug "donut hole" for seniors. But the coverage expansions were probably the most dramatic change. And unlike some government initiatives, the ACA paid for itself through a variety of means, including tax increases on the wealthy. Most notably, it imposed a Medicare surtax on families making over $250,000 a year.
Which means that if you repeal the ACA, you're immediately giving the rich a big tax cut. How big? According to this analysis from the Center on Budget and Policy Priorities, those making over a million dollars a year would see an average tax cut of nearly $50,000 a year. Millionaires would get 80 percent of the benefits of this tax cut.
And of course, you're giving them that tax cut in order to stop giving insurance to poor and middle-income people.
Worry not, Republicans say. We'll replace expanded Medicaid and subsidies with a new tax credit, so it should be no problem. But here's where you need to pay attention to the details.
The Republican plans currently being circulated would not only give tax credits in much smaller amounts than what people get from the ACA, they wouldn't be granted according to the size of your income. Instead of poor people getting more than rich people, they would go up according to your age: $2,000 a year for young people, rising to $4,000 a year for those who are older, but not quite old enough, to get Medicare.
If you think that a 60-year-old will be able to get health insurance for $333.33 a month once insurance companies are allowed to charge older people dramatically more (another change to current regulations Republicans want to make), you're living on another planet. And the credit would go to everyone regardless of income, so Bill Gates will get the same credit as those who are struggling.
Even that is too much for some conservatives, who say that tax credits are nothing more than a new "entitlement," and are threatening to vote against any bill that includes them. But here's what's important to understand about this tax credit: Poor and middle-income people would get less help than they get now, and in many cases they would find it impossible to afford coverage, while wealthy people would get more than they're getting now (which is currently nothing). On top of that, Republicans want to expand health savings accounts, which allow you to put aside money tax-free to pay for health care. But that only works if you've got extra money to set aside, so it's yet another benefit that accrues more to the wealthy.
I know what you're thinking: "I am shocked, shocked that the Republican Party would come up with a health care plan that is incredibly kind to the wealthy and hurts people with more modest incomes." I know, right — who woulda thunk it?
This gets down to a fundamental clash of values. Republicans talk about how while Democrats want universal coverage, what they want is universal access to coverage. But that access will only be universal in the same way we have universal access to BMWs. Anyone who can afford one can get one, but if you can't, you're out of luck. Republicans want a system with maximum freedom and minimum government involvement, and if that means tens of millions of people go without insurance, that's a price they're willing to pay.
Or more accurately, it's a price they're willing to have other people pay. So long as the wealthy don't have to pay too high a price. And if we give them a big tax break along the way, all the better.