Health

Congress Trades Obamacare for $516 Billion in Tax Savings

The House of Representatives voted to pass H.R. 3762, or Restoring Americans’ Healthcare Freedom Reconciliation Act this afternoon, repealing major components of the Affordable Care Act (ACA), including the individual and employer mandates, as well as tax penalties and subsidies for individuals purchasing health insurance through healthcare Marketplaces. The bill was passed by the Senate on December 3 and is on its way to the President’s desk for an expected veto. The bipartisan Congressional Budget Office (CBO) recently reported repealing Obamacare will save taxpayers $516 billion during the next 10 years.

The report, which was jointly reviewed by the CBO and staff from the Joint (Congressional) Committee on Taxation, considered the estimated cost of repealing Obamacare would have on both federal revenue and deficit spending, as well as parts of the U.S. economy if put into effect beginning 2018 through 2026. This is the first time a measure for repeal of the ACA will reach the President’s desk since it was signed into law March 23, 2010.

While repealing taxes and subsidies from Obamacare, Congress’ bill also retains popular provisions such as protecting Americans with pre-existing conditions and allowing parents to keep children on health insurance policies until they are 26 years of age. The bill also defunds the nonprofit group Planned Parenthood for one fiscal year. To address short-term gaps in access to care the bill increases spending for Community Health Centers and grants aid to states for the current prescription opioid and substance abuse epidemic currently plaguing regions of the U.S.

Provisions accounting for the greatest cost savings in H.R. 3762 include repealing the Medicaid Expansion program and federal subsidies for individuals purchasing health insurance in Obamacare Marketplace Exchanges. Until the June 2012 Supreme Court ruling giving states the option to opt-out of Medicaid Expansion, the program was originally a mandate of the ACA, creating publicly funded universal healthcare for the majority of low income Americans. And subsequently, those falling in the next tax bracket (Americans who earn up to 400 percent of the federal poverty level) qualify for a federal subsidy to purchase health insurance through the Obamacare Marketplace Exchanges. State and federal elected officials are now seeing that both of these provisions are costing taxpayers significantly more than originally projected, and should be repealed.

Taxes repealed by H.R. 3762 include not only the employer mandate, but also the “individual shared responsibility payment” on households that do not maintain private health insurance each year. The penalty for those who do not have health insurance in fiscal year 2016 should be prepared to pay either 2.5 percent of household income, or $695 per adult per household – whichever is higher – to the Internal Revenue Service. If passed, repealing the penalty for the individual mandate would go into effect in 2016.

Other taxes proposed for Congressional repeal include Limitations on Flexible Spending Accounts (estimated $32B in taxes), Tax on Over-The-Counter Prescription Medications (estimated $29.6B in taxes), repeal of the Medical Device Excise Tax (estimated $23.9B) and repeal of the Health Insurance Tax, which carried an estimate of $142.2B in taxes directly passed onto “small businesses” with between 50 and 500 employees as an additional cost to their health insurance premiums. While taxes bring in short term federal revenue, elected officials should modernize our healthcare system by lifting these tax burdens, then incentivize innovation in the private sector to fully integrate digital health and health IT to create a twenty-first century healthcare system.

As we enter year four of Obamacare implementation, we continue to hear about serious problems with rollout of the healthcare law. Record losses for private health insurers and cooperatives are driving providers out of the Marketplace, while individuals and families are struggling to pay high out-of-pocket costs to cover both their deductible and skyrocketing health insurance premiums. As such, the number of uninsured Americans remains significant and was reported to be 33 million by the U.S. Census Bureau in September 2015.

While much of the market manipulation designed by architects of the Affordable Care Act was intended to make healthcare affordable, the CBO report shows the disproportionate burden on taxpayers and consumers. We have the opportunity to repeal Obamacare, and replace it with policy reforms that put medical decisions back in the hands of doctors and patients, not the federal government and third party payers.


In Depth: Health

There has never been a time when both federal and state jurisdictions have been more in control of American’s healthcare than it is today. Implementation of the Affordable Care Act is well in motion, and each state has considered how to address provisions of the federal law as it has …

+ Health In Depth