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Thursday, April 19, 2012

The Budget vs. Health Care: Round 2

Ben D'Avanzo

Special Projects Manager

Late in March, the House adopted a budget proposal that calls for the dismantling of Medicare and Medicaid as well as the repeal of the Affordable Care Act and its critical consumer protections. In a report released last week, Families USA took a closer look at the Republican proposal.

The budget was an opening salvo on a battle for the future of health care for millions of Americans. Today, the battle continued in the House Ways and Means Committee, which has jurisdiction over taxes and some health care programs. The Republicans on the committee approved legislation that would make some of the cuts recommended by the budget, including a proposal that directly targets middle-class families who need assistance paying their health insurance premiums.

Here's how it works: Starting in 2014, the Affordable Care Act will help uninsured middle-class families pay for health insurance premiums by giving them monthly tax credits, based on their predicted income. At the end of the year, the IRS makes sure that the right amount of credit was paid, based on a family's actual-rather than projected-income. The law protects the family from a huge bill by capping the tax penalty they will be obliged to pay if there is a difference between the projected income and actual income. So, families won't owe a lot of money to the IRS due to a simple, unexpected change in income, such as a mom getting a small year-end bonus.

Now, Republicans on the Ways and Means Committee have voted to eliminate these caps that protect middle-class taxpayers. While there are many other ways that the Committee could have found savings, its leadership decided to go after the middle class.

This has serious consequences. Families eligible for the tax credit should not be worrying about a heavy tax penalty when seeking help to afford health insurance. Fearing a potential tax penalty, thousands may choose to remain uninsured rather than risk paying a penalty if their family has unexpected income changes. This undermines the goal of the Affordable Care Act to reduce costs for families and to reduce the number of uninsured.

This attack on health care for families may be the latest, but it certainly will not be the last. With deficit reduction continuing to take up the spotlight, we can expect future efforts to follow the House-passed budget's proposals to cut critical health care programs. Look for Republicans to push these radical priorities that, like eliminating the penalty cap, will serve to raise the cost and reduce the availability of health care for all Americans.