If you haven’t already, please contact Representative Goodlatte’s office at (202) 225-5431. Here are your talking points from 50 Ways-Rockbridge member Dave Millon:
President Trump says healthcare shouldn’t depend on ability to pay. As he promised in a Washington Post interview earlier this year, “We’re going to have insurance for everybody. There was a philosophy in some circles that if you can’t pay for it, you don’t get it. That’s not going to happen with us.”
Unfortunately the plan unveiled by House Republicans—strongly endorsed by the president—doesn’t do that. Millions of low-income Americans will lose health insurance. Others who can pay will likely end up paying higher prices. Meanwhile, Trumpcare cuts taxes for the rich.
Here are five reasons why Trumpcare is worse than Obamacare:
- Medicaid benefits will be reduced. Obamacare committed the federal government to provide enough money to the states so that they could expand Medicaid benefits to people earning less than 138 percent of the Federal Poverty Level. That’s about $16,600 for individuals and $34,500 for families of four. Previously many states had stringent eligibility requirements that did not reach these levels of coverage. Most states accepted the Medicaid expansion but 19 (including Virginia) did not. Even so, over 10 million people have benefited from expanded Medicaid eligibility.
Under Trumpcare that number will decline. This is because it will roll back the Medicaid expansion and replace it with per person limits on federal funding that will result in lower benefits. This is designed to achieve Republicans’ long-held desire to reduce the cost to the federal government of the Medicaid program.
- Subsidies will be reduced for low-income people but will increase for those who are wealthier. Obamacare subsidizes health insurance for lower- and middle-income people. The amount of the subsidy depends on a person’s income and the cost of insurance in his or her locality. It guarantees that a person will spend no more than a defined percentage of his or her income on health insurance. That percentage increases as income increases. Those earning above $48,000 are not eligible.
Trumpcare replaces these subsidies with tax credits. A tax credit reduces the income tax that a person would otherwise have to pay. Trumpcare credits increase with age and are not linked to income or cost of insurance. They range from $2000 to $4000 for individuals and max out at $14,000 for families. They are available to people earning up to $75,000 and phase out gradually as income increases above that level.
Under Obamacare, for example, a 29-year-old earning $20,000 per year would be required to pay $991 per year for an average-cost insurance policy; the federal government would pay the remaining $2798. The Trumpcare tax credit, though, would only be $2000. That’s an additional $67 per month for health insurance on a pre-tax monthly income of only $1667. Or take a 55-year-old earning $30,000. She would lose her $5067 Obamacare subsidy and receive a $3500 tax credit in return, a difference of $1567. Obamacare subsidies are even higher in places with above-average insurance costs but Trumpcare does not take that into account.
On the other hand, Trumpcare would give a 60-year-old earning $75,000 a $4000 tax credit. This person gets nothing under Obamacare.
In addition to the premium reduction subsidies, Obamacare also provides “cost-sharing subsidies” to low-income people that reduce the amount that must be paid for out-of-pocket deductibles and copayments. Trumpcare gets rid of these.
Elimination of Obamacare subsidies and roll-back of the Medicaid expansion will not occur until after 2019. This only delays Trumpcare’s harsh consequences. Conveniently, the pain won’t be felt until after the 2018 mid-term elections.
Trumpcare is bad news for poor people but cause for celebration for the relatively well off.
- Many people will pay higher premiums. Obamacare stipulates that insurance companies cannot charge older people more than three times what young people pay. Trumpcare increases that to a factor of five.
Further, Trumpcare eliminates Obamacare’s requirement that people buy insurance. That means fewer younger, healthier people are likely to buy insurance. A pool consisting mostly of older, less healthy people necessarily means higher premiums for those people.
- Access to abortion will be curtailed. Trumpcare tax credits cannot be used to offset the cost of insurance policies that include coverage for a woman’s legal right to an abortion. Further, for one year, Medicaid payments for non-abortion services cannot be paid to healthcare organizations like Planned Parenthood that perform abortions, even though they don’t use federal funds for abortions because it’s already against the law.
- Trumpcare will increase the deficit. In addition to tax credits for people who don’t need them, Trumpcare also provides for higher limits on Health Savings Accounts. These allow people to set aside tax-free dollars and earn tax-free gains on those dollars. Obviously, this only benefits people wealthy enough to put money into these accounts. Trumpcare also repeals Obamacare’s special income tax bump on individuals earning over $200,000 ($250,000 for couples).
Along with these new tax breaks for the wealthy, Trumpcare eliminates the special taxes that Obamacare enacted to pay for the program, including taxes on insurance companies, drug companies, and medical device manufacturers.
Trumpcare does retain some popular features of Obamacare, including the ban on discrimination based on pre-existing conditions and the option to keep children on their parents’ insurance through age 26. (The 10 essential benefits requirement lapses after 2019). But it’s possible that these provisions have survived because, for technical reasons, they can’t be eliminated through the legislative process the Republicans are relying on now. Watch for possible repeal of these provisions down the road.