BREAKING NEWS
AFRICA
Column

GOP’s Obamacare replacement will screw the working class. Here’s how we know

If there’s a hard-and-fast test for knowing when an act of legislating will benefit special interests at the expense of the average person, it’s this one: If it’s done in secret, the masses are getting screwed.

That’s certainly the case with House Republicans’ latest version of a replacement bill for the Affordable Care Act. The draft has been kept under lock and key by a small cadre of GOP leaders. This has triggered a comic-opera search for the document by Sen. Rand Paul (R-Ky.), who brought a portable copier along but was turned away from the House office where the draft supposedly was cached.

The draft has been spirited from location to location within the Capitol catacombs, the way prosecutors hide the key witness in a Mafia murder case. House Republicans were afforded a view of the elusive document, but couldn’t discuss it in public. Democratic members of the House, including Minority Whip Steny Hoyer (D-Md.), were shut out entirely, as were even GOP senators like Paul.

Plainly, there’s lots in the draft that the Republican House leadership doesn’t want the public to know. A few details have leaked out, suggesting why.

One rumor is that the analysis of the measure by the Congressional Budget Office, a bipartisan body tasked with “scoring” legislation for its fiscal impacts, is horrific, hinting that it will impose huge costs and lead to considerable reductions in the number of Americans covered by insurance. Fiscal analyses of the last House GOP draft leaked out before the secret draft show that the Republican plan would raise costs for the poor and working class while delivering a bounty to the wealthy.

Before we get to that, a brief review of the mischief that can be done when laws are made behind closed doors. One example is the anti-LGBT law signed in 2015 by then-Indiana Gov. Mike Pence. The public and the press were excluded from the signing ceremony, but not “supportive lawmakers, Franciscan monks and nuns, orthodox Jews, and some of the state's most powerful lobbyists on conservative social issues,” the Indianapolis Star reported.

Pence promptly tweeted out a photo of the ceremony, one step ahead of his discovery of the consequences of the ill-considered law. As Indiana faced an onslaught of criticism from anti-discrimination advocates and businesses — and the threat of job losses — Pence soon had to backtrack. The law was soon revised to remove its most noxious elements.

Exhibit B is former North Carolina Gov. Pat McCrory and his Republican minions in the state legislature. Last year, the legislature rammed through a bill restricting bathroom access for transgender individuals, and prohibiting municipalities from liberalizing their rules — at a one-day special session and with almost no warning or debate. The measure has cost the state untold employment, and may have cost McCrory his job. On his way out the door, he and the legislature used another hastily called special session to enact bills, again with almost no warning or debate, to hamstring his Democratic successor. Those bills are beginning to be overturned by North Carolina courts, one by one.

That brings us to the question of what the House GOP is hiding in its Obamacare replacement measure. You may hear, as this cabaret act unfolds, that the Republicans are only replicating what Democrats did with the original Affordable Care Act, which they say was shoved down their throats without any say. They cite a line from then-Speaker Nancy Pelosi (D-San Francisco), that “We have to pass the bill so you can find out what’s in it,” as if she was hiding the details until the vote. But that’s one of the most deliberately twisted quotes of modern political history: The true context can be found here.

The truth is that the ACA was thoroughly vetted and available for examination before passage. It was the topic of numerous hearings and its budgetary effects were scored several times, publicly, by the CBO and the Joint Committee on Taxes. None of that is true of the House draft.

Because only tiny portions of the bill have leaked out, most analyses have concerned its known precursors, the Empowering Patients First Act introduced last year by then-Rep. Tom Price (R-Ga.), who is now secretary of Health and Human Services, and a House GOP discussion draft that leaked out via Politico last week. Some of the ideas there also are embodied in a policy brief issued by the Republicans in mid-February, which I reported on then.

The GOP proposals would end the expansion of Medicaid under the ACA and repeal all of the act’s taxes. They would change the basis of the ACA’s system of subsidies for premiums and cost-sharing expenses from income to age. In other words, older Americans in the individual market would get higher subsidies than younger persons, even if they earned more.

The tax repeal, as I’ve explained, is a key driver of the Obamacare replacement movement because it’s an enormous tax cut for the rich — $346 billion over 10 years.

According to an analysis issued in December by the Tax Policy Center of the Brookings Institution and Urban Institute, repealing all of the ACA’s taxes would give the top 1% of U.S. households an average tax cut of $33,000, or about 2.1% of their after-tax income. Those in the top 0.1% would score an average tax cut of about $197,000, or 2.6% of after-tax income. The top 1% includes households with incomes of $774,300 or more in 2016 dollars; the top 0.1% starts at $4.76 million. The cost of eliminating the tax subsidies and Medicaid expansion, however, would fall exclusively on the lower 40% of households.

The change from income-based to age-based subsidies would also burden those families. In economic terms, the idea makes no sense; it means providing a bigger subsidy to, say, Bill Gates (age 61) than to a husband and wife in their 30s with $50,000 income and two kids. As I explained earlier, although healthcare spending tends to rise with age, older Americans tend to have more resources, too. The dominant factor in the affordability of health coverage is household income.

The Kaiser Family Foundation mapped out the impact of this change, as it is set forth in the leaked GOP discussion draft. “People who are lower income, older, or live in high premium areas would be particularly disadvantaged under the House Discussion Draft and Price bill relative to the ACA,” the foundation observed.

For instance, under existing ACA rules a lower-income American (household income of $20,000) aged 27 in 2020 would receive a $3,227 subsidy, $4,143 at age 40, and $9,874 at age 60. (The figures rise with age because the subsidy is partially based on the cost of insurance and the ACA allows insurers to charge higher premiums for older buyers, by a ratio of 3:1 compared with the youngest customers.) Under the discussion draft, those buyers would receive, respectively, only $2,000, $3,000, and $4,000. Middle-income buyers ($40,000) would get more from the GOP draft through age 40, but a lot less at age 60. Higher income buyers would do best under the House proposal — they’d get a subsidy of up to $4,000 no matter what.

The subsidies in both GOP versions would grow with inflation, but at rates that suggest they’d fall further behind those of the current ACA every year. Under the discussion draft, the average subsidy would decline from about 64% of the average ACA subsidy by 2020, to about 56% of the ACA figure by 2027. The divergence happens because ACA subsidies are tied to premiums of benchmark insurance plans, which tend to rise in price faster than overall inflation.

Leaked details of the secret GOP draft, also published by Politico, suggest that Republicans are so embarrassed by the subsidy handout to the rich that they’re pondering how to means-test it to keep the wealthiest Americans out of the trough. But the age-based structure remains.

The bottom line of the House Republicans’ plan is the same as it always was — pay off the rich, at the expense of Americans who actually need help. Some people argue that this is the party serving its own voters, but that’s not so. It’s the party serving its financial patrons, which is a very different group. The fact that it’s cooking up this new handout behind closed doors indicates how big a handout it’s going to be.

Keep up to date with Michael Hiltzik. Follow @hiltzikm on Twitter, see his Facebook page, or email michael.hiltzik@latimes.com.

Return to Michael Hiltzik's blog.


UPDATES:

12:32 p.m.: This post has been updated to clarify the range of premium differences by age permitted by the ACA.

Copyright © 2017, Los Angeles Times
EDITION: California | U.S. & World
65°