The Republican bill to undo the Affordable Care Act, also known as Obamacare, would bring down taxes for the very rich while eliminating thousands of dollars in benefits for the typical poor or middle-class household, a new analysis shows.
The typical household with more than $200,000 a year in income would pay $5,500 less annually in taxes under the recent plan put forward by GOP senators. By contrast, households with less than $10,000 a year would lose out on an average of about $2,600 in federal benefits annually, according to the analysis published Tuesday by the nonpartisan Urban Institute and Brookings Institution.
The Republican bill would water down or eliminate important provisions of Obamacare, although the GOP plan would retain the overall structure of President Obama’s reforms.
The bill’s current version — the basis for the new analysis — would get rid of taxes that Democrats under Obama laid on the rich to pay the reforms and reduce the subsidies designed to help consumers in the middle class buy private insurance. Republicans, however, are reportedly considering revisions to the bill that would keep some of the taxes in place, which would limit the savings for the wealthy.
At the same time, the bill would sharply limit spending on Medicaid, the federal program that provides insurance to poor Americans along with roughly half of pregnant women and nearly two thirds of all nursing-home residents.
The figures do not necessarily represent changes in how much households would pay, because they account for taxes and benefits but not changes in the cost of premiums. Republicans have argued that by deregulating the insurance sector, their bill would make insurance less expensive — so that households receiving less financial help to buy insurance under the GOP plan could save money on premiums.
The analysis also only describes how much federal health-care benefits cost, not how much they are worth to the people who receive them. For instance, the GOP bill could result in steeper out-of-pocket deductibles and co-payments for many households. As a result, some consumers might feel like the plans on offer — and the federal benefits they are using to buy them — are essentially worthless.
Similarly, Republicans have argued that Medicaid can be run much more efficiently and cheaply, so that reductions in outlays for the program will have a limited effect on whether beneficiaries can see their doctors.
Because of the retrenchments in Medicaid, the bill would impose the steepest reductions in benefits on the very poor. This is one of the most important differences between the Senate’s version of the bill and the version passed by the House, the analysis by Urban and Brookings suggests.
The groups’ previous report on the House’s version also projected substantial losses of benefits for the poor, but the reductions in the Senate’s bill are nearly twice what the House approved. Under the Senate’s bill, net benefits would decline by $2,500 a year — or 69 percent of average incomes — among households making less than half the federal poverty level.
The effects on specific households could vary, however.
The sick who rely regularly on Medicaid could be much worse off. On the other hand, in states that have not made Medicaid more generous under Obamacare, the GOP bill could allow some poor households that are not currently eligible for the program to receive subsidies for buying private insurance on the exchanges set up under Obamacare.
Those subsidies would become less generous for many in the lower middle class, while for the upper middle class as a whole, the bill would be a wash. Households in this group tend to receive less generous benefits under Obamacare anyway, and some would benefit from reduced taxes.
Again, though, the effects on individual households could be very different, depending on whether they currently benefit from Obamacare and how their premiums change.
As an example, the GOP bill would give insurers more freedom to charge older customers more. Because the upper middle class receives little in the way of federal subsidies for private insurance, older consumers in this group could wind up paying much more out of pocket.
CBO issued projections for a typical 64-year-old buying insurance individually with $57,000 a year in income. That consumer could expect to pay $6,800 annually for a so-called “silver” plan under Obamacare, after accounting for the subsidies, but that consumer would have to pay $20,500 a year for the same plan under the GOP bill.
Bringing down these costs for older consumers, or offering more generous benefits for the poor, could be costly, said Linda Blumberg, an economist at Urban and one of the authors of the report. She and her colleagues have argued for controlling costs by capping what doctors and hospitals can charge in places where patients have few options, guaranteeing assistance for deductibles and co-pays and offering reinsurance for insurers with costly patients.
Those provisions might not be excessively expensive, and similar idea have garnered bipartisan support in the past, Blumberg said. “There’s plenty there that the two sides should be able to agree on,” she said. “I’m not saying that they will.”