Who Knew Healthcare Could Be So Complicated? Part 3

Dear Donald –

We’ve already talked about the basic structure underpinning the ACA and the impact of the GOP bill on precipitating a death spiral by penalizing people who reenter the marker rather than those who stay out of it. Today I want to talk about subsidies. 

Health insurance can be expensive, so the ACA expanded Medicaid eligibility to anyone making less than 138% of the Federal poverty level and provided subsidies and tax credits to help those not enrolled in Medicaid purchase insurance on the private market. Now, let’s think about who needs help paying for insurance. Chances are, folks who don’t have much income are going to have a harder time being able to afford insurance than people with more money. Let’s say you have a $3,500 per year insurance plan. A 28 year old earning $20,000 per year will gave a much harder time covering that cost than a 55 year old making $100,000 per year. The ACA recognized that and made tax credits available to individuals purchasing private insurance on a sliding scale based on income. 

But wait. Money isn’t the same everywhere. Cost of living varies widely in this country and $75,000 in New York City doesn’t go nearly as far as it does in Sandusky, Ohio. That’s why the ACA actually made their tax credits not only contingent on income, but also on location. 

Those seem like smart designs. 

Now, let’s change things up a bit. First off, instead of giving subsidies to people based on income, the new Reoublican plan bases subsidies on age. Even though a 30 year old and a 50 year old may have the same health care plan, the 50 year old gets a bigger subsidy, even if she makes two or three times as much money as the 30 year old. Under the Republican healthcare plan, anyone making less than $75,000 per year, or couples making less than $150,000 per year, qualify for tax credits based on age. The subsidies increase by $500 for each decade of age, maxing out at $4,000 for individuals 60 and over. And that’s not all, those earning above $75,000 per year can get subsidies too, they just decrease the value by 10% of the amount you earn over $75,000. So a 60 year old earning $95,000 per year would get a tax credit of $2,000 ($4,000 minus 10% of $20,000). Similarly, a 22 year old making $15,000 per year would get a tax credit worth $2,000. 

Under what circumstances would two people making such vastly different sums of money need the same help to buy the same thing?  The only people this plan really benefits are wealthier and slightly older people. Young, low income people end up losing out in a major way. 

Particularly for those just above the poverty line, who don’t qualify for Medicaid (at least under the Republican plan), the $2,000 tax credit may be their only option for insurance coverage, and what kind of plan can you honestly buy for that? 

The Republicans have made a stock industry out of playing generations off of each other.  Any conversation about entitlements quickly sells out the young for the benefit of the middle aged, having decided long ago that younger generations should pay the price for years of financial mismanagement to benefit boomers.  

Paul Ryan recently said that the healthcare bill is about creating a fairer tax code, but let’s be honest, the only thing that fairer can possibly mean in this context is “more beneficial to older richer people”. That’s who Fepublicans have always been more concerned with, and nothing changes here. 

On Monday, minimum coverage requirements.  

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