GOP's Health Plan Is Class Warfare (By The Rich)

(Cartoon image is by Adam Zyglis in The Buffalo News.)

The following is part of an excellent article by Dylan Matthews at Vox.com:

The Republican plan would reduce federal revenues by $883 billion over 10 years. About $210 billion of that comes from eliminating the employer and individual mandates; the former is paid by companies that don’t insure their employees, and the latter is progressive, as it’s levied as a percentage of income.

But the bulk of the tax cuts would come from eliminating specific provisions meant to raise money for the Medicaid expansion and insurance subsidies in Obamacare, rather than to make sure the insurance market functions properly. The biggest of those is the 3.8 percent tax the Affordable Care Act applied to capital gains, dividend, and interest income for families with $250,000 or more in income ($125,000 for singles). The CBO finds that getting rid of this tax costs $157.6 billion over 10 years.

Repealing that tax is a change that, by definition, only helps the rich, or at least the affluent. If you’re part of a married couple and, like the vast majority of Americans, make less than $250,000 a year, or earn more than that but have little investment income, it doesn’t affect you at all. The Tax Policy Center finds that repealing the tax would amount to an average tax cut of $0 for households in the bottom 90 percent — those making $208,500 or below. A handful of people in the 80th to 95th percentiles would see cuts, but the vast majority wouldn’t. 

By contrast, members of the top 0.1 percent, who each on average make more than $3.75 million annually, would get an average tax cut of $165,090. 

Then there’s the 0.9 percent Medicare surtax, a hike on wage income in excess of $250,000 a year ($200,000 for unmarried people). The Republican bill would repeal this surtax, which the CBO estimates will cost $117.3 billion over 10 years. That would give everyone in the bottom 90 percent an average tax cut of $0, per the Tax Policy Center. The richest of the rich, the top 0.1 percent, would get an average cut of $30,520.

Another way of saying this is that the Affordable Care Act was one of the single largest downward redistributions of income in American history, made more so when considered in the context of the Obama administration’s increases in taxes on the rich and expansions of tax credits for the poor. This was a point that Jason Furman, Obama’s chief economist, made well in a speech last October.

“In concert with the effects of the ACA coverage provisions, changes in tax policy since 2009 will by 2017 boost incomes for families in the bottom quintile by 18 percent, or $2,200 (the equivalent to about a decade of income gains), and in the second quintile by about 6 percent, or $1,500, relative to what they would have been under the continuation of 2008 policies,” Furman noted. “Under President Obama, the Federal investment in inequality has increased by about 0.8 percent of potential GDP, more than any previous president since the Great Society.”

You don’t have to take Furman’s word for it. A simple glance at the funding mechanisms of the ACA — things like the surtaxes on income above $250,000 — and what it spent money on (namely health insurance for the poor) makes it clear that it takes money from the rich and gives it to the poor, in the form of health insurance.

The American Health Care Act, the Republican health care legislation backed by President Trump and Speaker Paul Ryan, undoes basically all of those components. And then it goes a step further, by slashing Medicaid to below its pre–Affordable Care Act levels using a per capita cap.

The AHCA would reverse one of the greatest actions against inequality ever taken by the federal government, and then increase inequality yet further. It is an act of class warfare against low-income Americans, waged for the benefit of the handful of rich taxpayers affected by Obamacare’s surtaxes.