The line going around Washington these days is that the Republicans previously tried to hide a tax cut for the rich in their Obamacare repeal measures; and now they're hiding an Obamacare repeal inside their tax cut bill.
That's correct. The Senate Finance Committee on Tuesday slipped a provision into its tax cut bill that would effectively repeal the Affordable Care Act's individual mandate. On the surface, this is a fiscal measure—it would theoretically reduce the federal deficit by $338 billion over 10 years, according to the Congressional Budget Office.
That's $338 billion the GOP could upstream to wealthy taxpayers in the form of a tax cut. But the costs and impact would fall squarely on the middle class. The repeal would drive as many as 13 million Americans out of the insurance market.
Remarkably, this move by the GOP comes just days after the Affordable Care Act won a resounding victory at the polls, when voters in Maine opted overwhelmingly to expand Medicaid under the ACA, overruling their GOP Gov. Paul LePage.
Nor is this the only assault on healthcare buried in the bill. There's also the potential for an annual cut in Medicare of at least $25 billion, according to a separate CBO accounting.
That's the result of a law known as PAYGO (for "pay as you go"), which requires Congress to offset any increase in the federal deficit with spending cuts. The law limits Medicare cuts to 4% of its budget per year, or $25 billion of its $625-billion budget.
"Such a drastic cut would undermine the delivery of care to the 57 million seniors and disabled Americans who depend on the program," says Max Richtman, head of the National Committee to Preserve Social Security and Medicare.
The CBO says, however, that it's impossible to find the rest of the $136 billion in mandated PAYGO cuts in programs that aren't exempt from reductions under the law, unless Congress votes to waive the rules. That requires 60 votes in the Senate, which can't be rustled up without the cooperation of Democrats. That's a hint that the current tax bills can't actually become law.
The Affordable Care Act repeal is at least partially the handiwork of Sen. Rand Paul (R-Ky.), who staggered back to Washington this week after being laid up from injuries sustained in a neighbor's assault. He asserted in a tweet that the amendment would "provide bigger tax cuts for middle income taxpayers," but there's nothing in the measure that applies any savings from the repeal to the taxes of moderate-income workers; like the rest of the bill, these savings would go principally to the 1%.
Virtually the entire U.S. healthcare establishment rose up to oppose the amendment Tuesday. In a joint letter to congressional leaders, the American Medical Assn., a coalition of health insurers, two hospital groups and the American Academy of Family Physicians warned that the measure would "result in a significant increase in premiums, which would in turn substantially increase the number of uninsured Americans…. Millions more will be uninsured or face higher premiums, challenging their ability to access the care they need."
More than a dozen other patient, consumer and healthcare worker advocacy groups also have weighed in, uniformly thumbs down.
They're not just blowing smoke. Their conclusion comes from a CBO analysis earlier this month on the effect of repealing the individual mandate. That's the provision that imposes a penalty on almost anyone who fails to carry health insurance; the penalty this year is $695 per adult and $347.50 per child or 2.5% of family income, whichever is higher, with a family maximum of $2,085. Technically, the Senate provision reduces the penalty for not carrying insurance to zero, but the effect is the same as outright repeal.
It's important to note how repealing the individual mandate could destabilize the entire individual health insurance market and lay the groundwork for a more thorough ACA repeal down the line. The individual mandate is the crucial counterbalance to another aspect of the ACA—the ban on charging customers with preexisting medical conditions or histories more than healthy customers. The only way to make a requirement that insurers treat all applicants the same is to require everyone, healthy or sick, to jump into the insurance pool. Otherwise, premiums will soar for the sick remaining in the pool.
That's the effect the CBO tracked. Its analysts reckoned that repealing the individual mandate would reduce the number of people with health insurance by 4 million in 2019 and 13 million in 2027. That's partially because healthier people would voluntarily skip insurance, and partially because the resulting increase in premiums for everyone else in the individual market would discourage more people from buying coverage. Anti-Obamacare Republicans may be calculating that as more customers drop out of the market, the ACA will look less relevant to voters and therefore easier to scrap.
In the nearer term, with fewer Americans on the insurance rolls, the cost of providing government subsidies to middle- and lower-income households will fall. Presto: lower government expenditures, and more money for tax cuts for the rich. In effect, the measure redistributes income from lower-earning households to high-income people. Paul's claim that it results in more money for the middle class is a fantasy.