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The Republican plan to repeal and replace the Affordable Care Act — often called Obamacare — will ultimately add up to big tax cuts for the rich.
Key points:
- Biggest tax cut would eliminate a 3.8 per cent tax on investment income
- About 90 per cent of the benefit of repealing Obamacare would go to the top 1 per cent of earners
- The tax would hit many middle-income families, according to the Tax Policy Centre
The bill would cut more than 20 taxes enacted under former president Barack Obama's heath law, saving taxpayers nearly $US600 billion over the next decade. The bulk of the money would go to the wealthiest Americans.
Low- and moderate-income families would lose their subsidies to buy health insurance in state and federal marketplaces. The subsidies would be replaced by tax credits to help them buy insurance.
Official estimates for how these people would fare under the bill have not been made public, even as House committees move ahead with the legislation.
The new health bill was released this week as congressional Republicans and President Donald Trump tried to make good on campaign promises to repeal and replace Obama's health law.
House GOP leaders said they wanted to give consumers more access to affordable health care with less government interference.
The effort, however, has been criticised by both the left and the right. Democrats argue fewer people would have health insurance, while some conservatives called the plan "Obamacare-lite."
Key figures of the new plan
The biggest tax cut would eliminate a 3.8 per cent tax on investment income for high-income individuals and families.
Eliminating the tax would save these taxpayers $US158 billion over the next decade, according to the nonpartisan Committee on Taxation — the official scorekeeper for Congress.
About 90 per cent of the benefit from repealing the tax would go to the top 1 per cent of earners, who make $US700,000 or more, according to the nonpartisan Tax Policy Centre.
Another big tax cut would repeal an extra 0.9 per cent Medicare tax on wages above $US200,000 for individuals and $US250,000 for married couples.
Repealing the tax would save higher-income families $US117 billion over the next decade.
'Tax cuts matter more than your health care'
Repealing the Medicare tax would also speed up the depletion of the Medicare trust fund. It would run out of money in 2025 instead of 2028, as is currently projected, said Senator Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee.
Taxes repealed in the bill
- Health providers pay an annual fee based on market share. Repealing the tax would save health insurers $US145 billion over the next decade.
- Prescription drugmakers and importers pay an annual fee. Repealing it would save pharmaceutical companies $US25 billion over the next decade.
- Medical device makers and importers pay a 2.3 per cent excise tax. Repealing it would save them $US20 billion over the next decade.
- A provision in Obamacare places a $US500,000 limit the amount of an executive's pay that health insurance companies can deduct. The bill repeals the provision, saving insurance companies $US400 million over the next decade.
Senator Wyden said that, "breaks a clear Trump promise not to damage Medicare".
"This bill sends a loud and clear message: Tax cuts for special interests and the wealthy matter more than your health care," Wyden said.
Representative Kevin Brady, chairman of the tax-writing Ways and Means Committee, said the healthcare taxes hurt consumers, businesses and economic growth.
"They hurt the economy. They hurt health care. They achieve nothing," the Texas Republican said at a news conference.
"I don't want Americans to continue to struggle under the Obamacare taxes."
Despite the lost tax revenue, Brady said the overall bill would not add to long-term budget deficits. However, no official estimates have been released.
The bill would not repeal the healthcare program's "Cadillac" tax on high-cost health insurance plans. Instead, it would delay the tax until 2025. The tax has already been delayed once, until 2020.
This tax would hit many middle-income families, according to the Tax Policy Centre. Delaying it by five years would save taxpayers $US49 billion.
AP
Topics: health, health-insurance, health-policy, health-administration, donald-trump, obama-barack, united-states