WASHINGTON (AP) — Senate Republicans’ new health bill cuts taxes by nearly $1 trillion over the next decade, mostly for corporations and the richest families in America.
It uses a budget gimmick to comply with Senate rules against adding to the federal government’s long-term debt.
Senate Republican leaders unveiled a draft of their bill to repeal and replace President Barack Obama’s health care law on Thursday and argued it would eliminate job-killing taxes enacted under the 7-year-old health law. Democrats countered that the bill is a giveaway to the rich at the expense of middle- and low-income families who will lose health insurance.
And in a Facebook post, Obama said: “The Senate bill, unveiled today, is not a health care bill. It’s a massive transfer of wealth from middle-class and poor families to the richest people in America. It hands enormous tax cuts to the rich and to the drug and insurance industries, paid for by cutting health care for everybody else.”
Senate Republicans released only a draft of their bill, with no analysis and no cost estimates. However, the tax cuts are very similar to those in the House bill passed last month, though some would be delayed to pay for more generous benefits.
The major tax provisions in the bill would:
Delay a new “Cadillac” tax on high-cost health insurance plans until 2026. This is a budget gimmick to ensure that the bill complies with Senate rules that forbid the legislation from adding to the federal government’s long-term debt.The tax was part of Obama’s health law, and it has long been unpopular among Republicans, as well as business groups and labor. On paper, the tax would take effect in 2026, generating billions of dollars in revenue every year after.
However, Congress has already delayed the tax once, until 2020, making it unlikely lawmakers will ever let it take effect. Of course, in 2026, it will be somebody else’s problem.
Repeal a tax on wealthy investors, saving them about $172 billion over the next decade.Obama’s health law enacted an additional 3.8 percent tax on investment income for married couples making more than $250,000 a year and individuals making more than $125,000. The Senate bill would repeal the tax this year.
About 90 percent of the benefit from repealing the tax would go to the top 1 percent of earners, who make $700,000 or more, according to the nonpartisan Tax Policy Center.
Repeal a new Medicare payroll tax on high-income families, saving them about $59 billion over the next decade. Obama’s health law enacted an additional 0.9 percent payroll tax on wages above $250,000 for married couples and above $125,000 for individuals. The Senate bill would repeal the tax in 2023.Repeal a tax penalty on larger employers not providing health insurance to workers, saving them $171 billion over the next decade.Repeal a tax penalty for people who do not get health insurance, saving them $38 billion over the next decade.Repeal a new annual fee on health providers, based on market share, saving them about $145 billion over the next decade.Repeal a 2.3 percent excise tax on companies that make or import medical devices, saving them around $19 billion over the next decade. The Senate bill would repeal the tax in 2018 – a year later than the House bill.Repeal a 10 percent excise tax on tanning services, saving people $621 million over the next decade.How the Senate bill compares to the House bill and to the Affordable Care Act that Democrat Barack Obama signed into law seven years ago:
Obama law: States have the option to expand Medicaid to cover more low-income adults. Feds pick up a generous share of the cost, no less than 90 percent. Medicaid covers some 70 million people, from newborns to elderly nursing home residents.
House GOP bill: Reduces the generous federal match for expanded Medicaid to the same rate states get for other beneficiaries, starting in 2020. (The basic Medicaid match rate now averages 57 percent nationally.)
More significantly, ends Medicaid’s longtime status as an open-ended entitlement, with Washington paying a share of what each state spends. Places a per-person limit on future federal contributions, starting in 2020.
Senate GOP bill: Stretches phase-out of Medicaid expansion financing. Higher payments would be provided through 2023. Exempts spending on special-needs children from cap on federal Medicaid matching contribution. Uses a less generous inflation adjustment than House bill.
Obama law: People cannot be denied coverage because of pre-existing medical problems, nor can they be charged more because of poor health.
House GOP bill: To be protected, consumers must avoid a break in coverage of more than 63 days. Those who let their coverage lapse pay a 30 percent premium penalty for a year. States can seek waivers that would allow insurers to charge higher premiums based on health status under certain circumstances.
Senate GOP bill: Similar requirement to avoid a break in coverage, but penalty is a six-month wait for policy to take effect. States cannot seek waivers that would allow insurers to charge more based on health.
Obama law: Provides two kinds of subsidies for people who don’t have access to coverage on the job. Income-based subsidies help with premiums and with out-of-pocket costs such as deductibles and copayments. Premium subsidies keyed to the cost of a midlevel “silver” plan.
House GOP bill: Premium subsidies are keyed to age, not income. Ends cost-sharing subsidies in 2020, while failing to clear up uncertainty about whether they can be paid currently.
Senate GOP bill: Premium subsidies are keyed to income, age and geography, and are more tightly focused on lower-income people. But the benchmark for subsidies would be a bare-bones “bronze” plan. Cost-sharing subsidies are explicitly extended through 2019, an important detail that should help calm insurance markets.
Obama law: Insurers cannot charge their oldest customers more than three times what they charge young adults.
House GOP bill: Loosens the age restriction so insurers can charge older adults up to five times more.
Senate GOP bill: Generally follows House standard.
Obama law: Requires those deemed able to afford coverage to have a policy or risk fines from the IRS. Requires larger employers to offer coverage to full-time workers.
House GOP bill: Repeals coverage mandates immediately.
Senate GOP bill: Same as House.
Obama law: Requires all insurance plans to cover services from 10 broad “essential services,” including hospitalization; office visits; prescriptions; maternity and childbirth; substance abuse treatment; rehabilitation; and preventive services, including birth control at no additional charge for women.
House GOP bill: Allows states to seek waivers from the benefits requirement.
Senate GOP bill: Also provides a pathway for states to seek benefit waivers.
Obama law: Medicaid expansion has enabled many states to provide comprehensive treatment to people caught in the opioid epidemic.
House GOP bill: No additional money for the opioid epidemic.
Senate GOP bill: Creates $2 billion fund to provide grants to states for substance abuse and mental health treatment. Ohio Republican Sen. Rob Portman had sought $45 billion over 10 years.
Obama law: Raised taxes on upper-income people and health care companies to finance coverage expansion.
House GOP bill: Cuts taxes by nearly $1 trillion over the next decade, mostly for corporations and the richest families.
Senate GOP bill: Tax cuts very similar to House bill, though some would be delayed.
Obama law: Private health insurance plans sold to people who receive federal subsidies can cover abortion. However, they must collect a separate premium, strictly segregated from taxpayer funds.
House GOP bill: Forbids abortion coverage by private plans sold to people who receive taxpayer subsidies. Defunds Planned Parenthood.
Senate GOP bill: Forbids abortion coverage by plans sold to people who receive taxpayer subsidies. Defunds Planned Parenthood.
However, under Senate rules, there’s a chance abortion restrictions on private insurance plans may be struck down. In that case, Senate leaders plan a workaround. Billions of dollars to stabilize state health insurance markets would be funneled through the Children’s Health Insurance Program, which already has strong limitations on abortion funding. The idea is that insurers needing access to the stability fund would essentially have to drop coverage for abortions.
