Tax Take on Healthcare Bill (Mar. 9)

Update 167:  Tax Take on Healthcare Bill

(aka Reverse Robin Hood Tax Care Act)

 

House Speaker Sen. Paul Ryan’s press conference yesterday about the new GOP healthcare bill oozed enthusiasm for the legislation to replace the ACA, which he referred to as “a collapsing law doing real damage to families every day in America.”

 

The House GOP health care overhaul bill involves and implicates the tax code, the national debt, and social policy, as the vehicle for a reverse transfer payment on a scale that rivals if not exceeds the TARP legislation of 2008.

 

The bill is called “World’s Greatest Healthcare Plan of 2017” but a more modest and informative title might be “The Reverse Robin Hood Tax Care Act of 2017.”  The tax take on the bill is below.

Best,

Dana

______________________________

 

Shifts in Tax Liability

The plan itself retains some of the ACA, but guts much of the original sources of funding and reorganizes the qualifications for tax relief.  Some major proposed changes in tax liability stem from the elimination of:

• the Premium Tax Credit,
• penalty taxes on businesses with 50 or more full-time employees who do not provide adequate coverage,
• and excise taxes on health insurance providers and pharmaceutical manufacturers

The overall tax cuts are sweeping, as they shift benefits for taxpayers from tax credits provided in an income-based model to tax credits through an age-based model.  Those likely to be hit hardest by the changes are the low-earning age bookends of the groups under 30 and those over 60.

$600 Billion in Tax Cuts

The entire GOP healthcare plan – coverage and finances – is skewed heavily in the upper class’ favor.   As tax credits are a key component to the new plan, those earning $250,000 or more stand to see more in tax cuts than most Americans earn annually.   Americans will pay for their future healthcare plans via tax credits, the low earning end of the spectrum will see far fewer credits (in dollars) than those on the higher end.

The bill further repeals a 3.8 percent tax on investment income and a 0.9 percent tax on wages.  Repealing the investment tax will reduce federal revenue by $157.6 billion over a 10-year period, the forgone revenue from the wage tax is $117.3 billion over 10 years.  The overall estimates of tax cuts from the bill amount to about $600 billion.

Redistribution

 

The tax cuts extend beyond just those for high-earning individuals, as the bill also offers relief from ACA taxes to fringe industries (indoor tanning, for one) and removes the mandate requiring employers with over 50 full-time or equivalent employees to offer healthcare coverage.

Instead, companies can pay the individual employees directly the amount they would have spent on healthcare coverage, which then becomes taxable income for the employee, reducing the quality of coverage within financial reach of the individual.  For those in lower-income groups, the expanded state-level qualification criteria for Medicaid coverage would evaporate after 2020.

 

The net effect?  The bill would exacerbate inequality, reducing taxes for the wealthy at the expense of affordable insurance for millions of ordinary Americans who would lose their health coverage.  Millions more will see higher premiums and out-of-pocket costs.

Progressivity Index

 

It would be interesting to see how the GOP’s healthcare plan measures on a progressivity scale.  While progressivity is not often measured, the little known Kakwani index is used by the World Bank to understand how progressive and redistributive a healthcare system is.

Given the massive tax credits that the rich will benefit from through the plan, there is little reason to believe that the plan is progressive enough to benefit the bulk of Americans.  Lawmakers might want to see where this plan falls on the Kakwani index.

 

Politics

As it stands, the American Health Care Act has an uphill climb to the president’s desk. In the event that it passes the House –where it may face enough opposition from the Tea Party that Democratic votes may be required for passage – it faces even greater hurdles in the Senate.

 

Those in the GOP are already criticizing the plan as “Obamacare Lite,” arguing that it repeals too little of the ACA and does not offer enough solutions.  Others like Sen. Rand Paul and Cong. Mark Sanford spoke out together against the replacement plan yesterday and Ted Cruz mentioned his grievance with the bill –that it creates a new entitlement.

 

But the bill has an advantage available to legislation that qualifies for reconciliation. The Senate still has to provide for the FY 17 budget after the current budget resolution expires in April 28.  Including the tax care bill as a reconciliation instruction will leave Democrats near powerless, as passage would require a simple majority, since reconciliation legislation is filibuster-proof.

 

In addition, the CBO rating has yet to be released, and reports vary on when that could come (March 10, according to Sen. Mitch McConnell, or March 13, according to House Minority Leader Nancy Pelosi). An unfavorable rating could scare off some additional Republican votes.

32 thoughts on “Tax Take on Healthcare Bill (Mar. 9)”

  1. I’m commenting to let you be aware of of the awesome discovery my child developed browsing the blog. She came to find a good number of details, including what it’s like to have a wonderful giving mindset to have men and women quite simply have an understanding of selected hard to do subject areas. You really exceeded our expectations. Many thanks for giving the insightful, safe, explanatory and as well as easy thoughts on the topic to Jane.

  2. Excellent goods from you, man. I’ve understand your stuff previous to and you are just extremely great.

    I really like what you’ve acquired here, certainly like what you’re saying
    and the way in which you say it. You make it entertaining and you still take care of to keep it sensible.
    I can not wait to read far more from you. This is really a wonderful web site.
    0mniartist asmr

  3. What’s up, I read your blog like every week.

    Your humoristic style is awesome, keep doing
    what you’re doing! 0mniartist asmr

  4. I’ve been exploring for a little bit for any high quality articles or weblog posts in this kind of area .
    Exploring in Yahoo I eventually stumbled upon this site.
    Studying this information So i’m satisfied to show that I’ve a very excellent uncanny feeling I
    found out just what I needed. I most unquestionably will make sure to do
    not forget this website and give it a look regularly.

  5. That is a great tip especially to those fresh to the blogosphere.
    Simple but very accurate info… Appreciate your sharing this one.
    A must read article!

  6. I’m curious to find out what blog platform you’re using?
    I’m having some small security problems with my latest site and I would like
    to find something more risk-free. Do you have any suggestions?

  7. Thanks , I’ve just been looking for info about this subject for ages and yours is the best I have
    discovered till now. But, what in regards to
    the conclusion? Are you positive about the supply?

  8. Aw, this was a very good post. Taking a few minutes and actual effort
    to create a top notch article… but what can I say… I procrastinate a lot and never
    manage to get nearly anything done.

  9. scoliosis
    Hi I am so delighted I found your web site, I really found you by accident, while
    I was researching on Google for something else, Nonetheless I am here
    now and would just like to say cheers for a incredible post
    and a all round enjoyable blog (I also love
    the theme/design), I don’t have time to browse it all at the
    moment but I have saved it and also added your RSS feeds,
    so when I have time I will be back to read more, Please do keep up the superb b.
    scoliosis

  10. scoliosis
    Write more, thats all I have to say. Literally, it seems as though you relied on the video
    to make your point. You definitely know what youre talking about, why waste your intelligence on just posting videos to your site
    when you could be giving us something informative to read?
    scoliosis

  11. free dating sites
    First off I would like to say fantastic blog! I had a quick question in which I’d like to ask if
    you do not mind. I was interested to know how you center yourself and clear your mind
    before writing. I have had difficulty clearing my mind in getting my thoughts out there.

    I do take pleasure in writing however it just seems like the first 10 to 15 minutes
    tend to be wasted just trying to figure out how
    to begin. Any recommendations or tips? Thanks! dating sites https://785days.tumblr.com/

  12. dating sites
    Can I just say what a relief to discover someone that really knows
    what they’re discussing over the internet. You actually know how
    to bring an issue to light and make it important. More and more people
    should check this out and understand this side of the story.
    It’s surprising you are not more popular because
    you definitely have the gift. free dating sites

  13. Nice post. I learn something new and challenging on websites I stumbleupon every day.
    It’s always useful to read content from other writers and
    use a little something from their sites.

  14. We are a bunch of volunteers and opening a brand new scheme in our community.
    Your web site offered us with helpful information to work on. You
    have performed an impressive task and our whole
    community will likely be grateful to you.

  15. Hello There. I discovered your blog the usage of msn. That is a
    very smartly written article. I will be
    sure to bookmark it and come back to read more of your useful information. Thank
    you for the post. I’ll definitely comeback.

  16. Hello there! This is kind of off topic but I need
    some help from an established blog. Is it difficult to set
    up your own blog? I’m not very techincal but I can figure things out pretty fast.
    I’m thinking about creating my own but I’m not sure
    where to begin. Do you have any ideas or suggestions?

    Appreciate it

  17. I do not even know how I ended up here, but I thought this post
    was great. I don’t know who you are but definitely you are going to a famous blogger if you
    aren’t already 😉 Cheers!

  18. Hey There. I discovered your weblog the use of msn. That is a really
    well written article. I will be sure to bookmark it and come
    back to learn extra of your helpful info. Thank you for the post.
    I’ll certainly comeback.

  19. Hi there! Quick question that’s completely off topic. Do you know how to make your site mobile friendly?
    My blog looks weird when viewing from my iphone. I’m trying to find a theme
    or plugin that might be able to resolve this issue.
    If you have any suggestions, please share.
    Appreciate it!

  20. I think that is one of the most vital information for me.

    And i am satisfied reading your article. But wanna
    observation on few basic issues, The site style is great, the articles is actually great : D.

    Good task, cheers

Leave a Comment

Your email address will not be published. Required fields are marked *