The American Health Care Act would repeal many, many aspects of the Affordable Care Act, including nearly every tax created by that law and doesn’t really replace any of them. As I predicted last week at EBA’s Workplace Benefits Renaissance conference, the previously discussed proposal to eliminate employer health insurance tax exclusion did not make the final cut. Some taxes survive, such as the Cadillac tax, but will be delayed a few years. The result is there’s going to be a big cost to this bill.
No more wage-based advance tax credits. Age will determine how much tax credit you get, the tax credit will be refundable, with advance payment mechanism possible. But income does matter, since if your income is more than $75,000 for an individual or $150,000 if married you’re not getting any tax credit for health insurance.
The practical effect of this is to expand the number of people who can get a tax credit, but only so much. How much the tax credit is will be reduced significantly for most people and the kicker is that older Americans get twice as much as younger Americans. But older Americans will pay five times more than young adults.
I read the bill with an open eye — I was very glad that the employer exclusion language was missing in action — but this is a repeal (in big bold letters) and replace (in ultra-light type) bill. It looks to be the kind of bill that will allow Speaker of the House Paul Ryan (R-Wis.) to get above 218 votes and get this thing over to the Senate.
The legislation modernizes the health savings account and also keeps the existing marketplace advance tax credit programs in place until 2019. It moves Medicaid into block grants based on a per capita amount and moves away from pay whatever is billed. There’s also a fascinating section excluding individuals who have won $80,000 or more from a lottery from being in Medicaid. Those folks will learn from the tanning bed folks and have a lobbyist by the end of the week!
Overall, it’s a bill full of politics. For example, elective abortion coverage in a health plan will render it ineligible for any tax credit treatment. The American Health Care Act also fulfills other political promises: No more individual or employer mandates, new incentives to keep coverage — and pay more if you lose coverage, especially with a pre-existing condition.
Meanwhile, it does little to address the ongoing concern about cost. To quote my incredibly quotable friend adviser Mark Gaunya of Borislow Insurance, “Health Insurance is expensive because healthcare is expensive.” The discussion that we need to have about cost — and everyone’s responsibility to its extraordinary rise since the early 1990s — still needs to occur.
Today, I’m left with this disappointed taste in my mouth, like when I first tasted New Coke in 1985. I know they were trying to get me to think it tasted better than Pepsi, but in my mind, they didn’t do that well and it made me think how much I really did like the old Coke. It’s true that Obamacare is politically unpopular, but we need to remember that many, many provisions of the Affordable Care Act remain incredibly popular.
I feel like I should trademark “Classic Obamacare.”
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