If the GOP’s newly proposed healthcare bill, the American Health Care Act (AHCA), becomes law in its current state, it would change or repeal more than a dozen taxes that help fund Medicare and Medicaid subsidies under the Affordable Care Act, commonly known as Obamacare. The taxes targeted for repeal include taxes on corporations, as well as taxes related to individual income. According to estimates from the Congressional Budget Office (CBO), the federal government’s revenue would decrease by $700 billion over the next decade due to these tax cuts. The winners of the tax breaks under the GOP’s newly proposed healthcare bill include:
The Senate bill will give high-income earners (individuals who earn at least $200,000 annually or couples that earn $250,000) a tax break by eliminating two Medicare taxes on such individuals. Specifically, it would eliminate the 0.9% Medicare payroll tax and the 3.8% tax on net investment income, including bonds, stocks, capital gains and interest, levied by the Obamacare to help fund Medicare subsidies. However, by repealing these two taxes, the federal government stands to lose about $231 billion in revenue over a 10-year period, says the CBO.
Healthy, Mid-income Earners
While Obamacare gives tax credits to low-income earners to enable them purchase health insurance through the Health Insurance Market, it caters only to individuals who earn less than $48,000. The AHCA, on the other hand, extends these tax credits to Americans who earn upward to $100,000. Moreover, the AHCA makes it easier for insurers to charge lower rates to young people. Obamacare allows insurers to charge the oldest enrollees up to three times as much as the youngest enrollees. Under the AHCA, insurers would be able to raise premiums for the elderly and at the same time, lower premiums for young Americans. In fact, according to estimates from the RAND Corporation, this policy would lower the annual health insurance premiums for the average 24-year-old American from $2,800 to about $2,100.
Individuals with Pre-existing Conditions
The Senate bill ensures insurers do not deny individuals with preexisting conditions coverage. Moreover, its “continuous coverage” protections prohibit insurers from charging such individuals more than the applicable standard rates. The bill also creates funds to assist states take care of individuals with preexisting conditions. These funds include the $100 billion Patient and State Stability Funds intended to assist states stabilize their individual markets by lowering costs and improving access for patients. The Invisible Risk Sharing Program will provide an additional $15 billion to help insurers cover high-cost enrollees.
Unlike Obamacare, the Senate bill would not require employers to provide their employees with affordable coverage. Consequently, companies will enjoy several benefits. Firstly, companies that fail to provide cover for their employees will not get in legal trouble. Secondly, large companies will have less work to do in regards to complying with reporting requirements. Thirdly, the federal government is likely to take longer to implement the tax on high-cost employer health plans.
If the AHCA, becomes law, it will repeal the taxes imposed by Obamacare on high-income earners, extend the tax credit program to individuals earning more than $100,000 to assist more Americans purchase health insurance, and increase funding for people with preexisting conditions. The groups that stand to benefit the most from these amendments include high-income earners, people with preexisting conditions, the young, mid-income earners and large employers.
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