Print Friendly and PDFPrinter Friendly Version

Blog
Monday, January 16, 2017

Tax Cuts Undermine Trump’s Pledge on ACA Replacement

Ron Pollack

Executive Director

Originally published as a guest post at Vox.com


As the clock ticks nearer to the day when President Trump and the Republican Congress move to repeal the Affordable Care Act, a struggle looms with a simple, elemental force that cares not for slogans, spin or bluster — and that is the troubling arithmetic encompassed in the Republicans’ expected repeal bill.

More specifically, the arithmetic focuses on whether Trump and congressional Republicans will have the fiscal ability to pay for a “great” replacement to the repealed ACA. (The President-elect announced this weekend, dubiously, that he is putting the finishing touches on just such a plan.) This is because Republicans, in their past ACA repeal bills and their expected new repeal bill, include large, regressive tax cuts — tax cuts benefiting couples with incomes in excess of $250,000 a year as well as health insurers, pharmaceutical companies, and medical device manufacturers.

The total cost to the federal government of these tax giveaways to wealthy people and interest groups is estimated to be almost $600 billion over the next decade — which, when included with other fiscal measures in the repeal bill, would result in losses of federal revenues approximating $1 trillion. As a result, the Trump Administration and congressional Republicans would have wholly inadequate resources for a replacement that prevents many millions from losing health coverage.

This revenue played a key role in underwriting the costs of expanded health coverage. It enabled coverage expansion to 20 million people who were previously uninsured. It helped to pay for significant tax-credit premium subsidies for people buying private insurance as well as for expansion of the safety-net Medicaid program.

It’s simple: less money means less coverage — and worse coverage

When this revenue is lost, a combination of problems will occur for the people who recently gained coverage — as well as many others. It will most likely mean that Trump and congressional Republicans will be bereft of resources to prevent wholesale losses of coverage. For those who retain coverage, it means any replacement legislation will result in coverage that is relatively skimpy and comes with higher premiums, deductibles, and other co-payments — which, for many, will be unaffordable.

To include these tax giveaways in legislation eliminating premium subsidies for moderate-income families and ending Medicaid expansion for the poor is a clear example of Robin Hood in reverse. And it’s not a temporary move, despite the rhetoric. This is not a situation in which bad programs and rules are removed in preparation for the arrival of a better suite of policies Whether as a conscious strategy or as an unintended consequence, the withdrawal of substantial revenue from the federal government makes it impossible that the “replace” legislation can match, let alone improve on, the ACA’s successes.

This is an arithmetic problem that won’t likely be overcome.

Rhetoric that does not square with budget reality

President-elect Trump is apparently aware of this. During a television interview with “Dr. Oz” back in September, Trump was asked what he would do for people “who fall through the cracks” following the repeal of the ACA. Trump said public funds would have to be made available for their healthcare — likely through Medicaid.

“We’re going to take care of those people,” Trump said “We have no choice. We're not going to let people die on the streets.” In an interview with the Washington Post this weekend, Trump swore he would provide “insurance for everybody,” while offering precious few details about funding or logistics.

These are fine sentiments. But the budget arithmetic problem belies it. If Republicans give away the precious funds dedicated to the ACA in a transfer of wealth from the bottom to the top, there will be few resources left to help the millions of people who will lose coverage following the ACA’s repeal.

Arithmetic is a crucial part of governance. Republicans now have total control over the legislative and executive branches. They can govern by subtraction, and take health care away from millions with no practical plan or resources to restore it. Or they can govern by addition, and make sure they have ready a replacement plan for the ACA that will build on its success, make it even stronger — and with an ability to pay for it.

A great nation like ours surely needs a more robust approach to health care than simply asserting no one should die in the streets — while at the same time distributing money away from the part of the government that lets us accomplish that worthy goal. We should dedicate the resources to ensure that everyone has access to quality, affordable access healthcare.