Wednesday, March 1, 2017

How the ACA and Gop Health Plans Grant Tax Credits //Kaiser Family Foundation

Figure 1: How House Republicans’ health reform plan might shift average health insurance tax credits, based on income and age, in 2020
The GOP plans are basically age-adjusted flat grants of tax credits.  Like all flat tax proposals they are highly regressive (the $12/hour foodworker and Warren Buffett get the same amount.)
but the GOP approach does respond to an ACA weakness - which is that all subsidies end at 400% of poverty ($47,000 for a single individual in 2017.   Of course the current system provides a lot of other breaks:
* workers in employer-based plans pay low premiums and the entire cost is deductible by the emloyer.  For them health insurance may be free - but family coverage may not be provided, worker contributions may be substantial, etc.
As Trump has now famously said: it is very comlicated.  - gwc
How the ACA and GOP Health Plans Grant Tax Credits

Like the ACA itself, replacement proposals – such as those by the House leadership; the House Discussion Draft recently circulated; and Tom Price, a former member of Congress and now Secretary of HHS – include refundable tax credits to help make premiums more affordable for people buying their own insurance. This might seem like an area where a replacement plan could preserve a key element of the ACA. However, the tax credits are, in fact, structured quite differently, with important implications for affordability and which groups may be winners or losers if the ACA is repealed and replaced, as illustrated by the House Discussion Draft and Price proposal.
For current marketplace enrollees, the House Discussion Draft and Price bill would provide substantially lower tax credits overall than the ACA. 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. People with incomes over 400% of the poverty level – including those buying individual market insurance outside of the marketplaces – do not get any financial assistance under the ACA but would receive tax credits under the Price proposal.
The underlying details of health reform proposals, such as the size and structure of health insurance tax credits, matter crucially in determining who benefits and who is disadvantaged.

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