The GOP's New Health Care Provision is a Bunch of Bullsh*t
The House of Representatives is set to vote on its Obamacare repeal and replacement on Thursday, and it’s coming down to the wire. The GOP can’t lose more than 21 votes in the House, and the whips are whipping and the Trump is Trumping in an attempt to ram it through. It’s probably going to work, too, because the GOP wouldn’t risk the humiliation of putting it up for a vote only to see it fail.
To get it through, however, Paul Ryan has had to add some sweeteners to appeal to constituencies from both the left and the right of his own party. The most absurd is this one, designed to appeal to moderates afraid that old people in their districts will lose health care under the new bill.
The amendment would establish a reserve fund of at least $75 billion for tax credits to help the core constituency that propelled Trump to the White House: Americans between 50 and 64, who would see their premiums skyrocket under the current repeal plan. But the amendment would not set up the tax credits - it would instruct the Senate to do so, forcing House Republicans to take a vote on something the upper chamber would do later.
How would this money be used? “¯\_(ツ)_/¯,” the House seems to be saying. “Let the Senate figure it out.” In other words, the House wants to pass the bill and take all the glory, knowing that it will probably ultimately fail in the Senate, allowing the House to shift blame for its failure to half a dozen Republicans in line to block it.
How would these tax credits even work?
I don’t know a ton about tax law, but according to the CBO, the average 64 year old who makes $26,000 a year will see her premiums rise from $1700 under Obamacare to $14,500 a year, meaning that the tax credits will need to make up about a $13,000 difference for that person. But if it’s a refundable tax credit, it’s a non-starter, because low-income older people who earn $26,000 don’t even have have tax liability of $13,000 to begin with, so they’ll never get $13,000 back (they’ll probably get $0, because the tax liability for someone making $26,000 is probably $0 after all the conventional deductions have been made).
In the event that it’s a refundable tax credit (meaning, you can get a refund on it even if you pay $0 in taxes), it means the average 64 year old who earns $26,000 a year would need a $13,000 refund to cover her insurance. But wait! Tax refunds come after you’ve paid for the insurance, which means they’d have to pay $14,000 in insurance (or more than half their income) before they’re even eligible for the refund.
In other words, this is of no help to the very low income people it’s meant to serve unless that low income person can take out a $13,000 no-interest loan to pay for one year’s health insurance before receiving the refundable tax credit the following year to pay back the loan before taking out another loan to pay the subsequent year’s health insurance.*
But dollars to donuts, despite the vague, byzantine nature of these tax credits, it will likely pass the House, because the GOP hates President Obama that much.
(* Did I do that right, tax people?)
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