The GOP’s ObamaCare replacement will boost jobs and cut taxes
Ignore the grandstanding on Capitol Hill and the noise coming from town-hall protests around the nation. The Republican bill to repeal and replace ObamaCare will boost your chances of getting a job and cut your tax bill, not to mention your insurance costs.
The repeal bill — called the American Health Care Act — also will stave off a tidal wave of future Medicaid spending that threatens to drown the states and Uncle Sam in red ink. Here’s how.
No more penalties. If you’re among the 8 million people getting whacked with a tax penalty for not enrolling in an overpriced ObamaCare plan, the repeal bill is good news. The federal government will no longer compel you to buy insurance.
The repeal bill also cancels penalties on employers. ObamaCare forced all but the smallest employers to provide a benefits package far costlier than what they had been offering prior to the reform. Employers then passed these costs onto workers, raising deductibles by 50 percent on about 155 million people.
Other employers dropped coverage altogether for millions of workers. Only in Washington, DC, would an employer mandate result in fewer people getting on-the-job coverage.
Still others — like community colleges and fast-food outlets — demoted workers to part-time status (having them work less than 30 hours a week) to avoid the mandate. In New York, some service and manufacturing companies stopped hiring altogether, according to the New York Fed.
Without repealing ObamaCare, there would be 2 million fewer people with full-time jobs by 2025, according to the Congressional Budget Office. The repeal bill is a jobs program.
Lower taxes. It’s also a massive $600 billion tax cut. It eliminates taxes that pushed up the costs of insurance and devices like artificial hips. It also allows people to put aside more earnings tax-free in a health-savings account for out-of-pocket health expenses.
And it eliminates the taxes that targeted people earning more than $200,000 a year, including the ObamaCare payroll tax hike (2.35 percent) and the 3.8 percent ObamaCare tax on unearned income.
Medicaid fix. Repeal rescues the nation from a looming financial calamity.
Medicaid, the public program for low-income people, has grown explosively under ObamaCare. Medicaid now covers 74 million. The ACA encouraged states to expand enrollment by promising the federal government would pay between 90 percent and 100 percent of the cost. That’s like handing your teenager your credit card.
State politicians eager to rake in federal funds spent with abandon. More than half of all federal dollars now going to the states are for Medicaid.
And Medicaid spending per recipient is growing twice as fast as Medicare for seniors. But without improving health outcomes, like controlling blood pressure.
You pay for Medicaid costs twice: first as a taxpayer and again as a consumer. Because Medicaid reimburses hospitals and doctors only 90 cents for every dollar of care, the shortfall gets shifted onto patients with private insurance, adding about $1,800 a year to your premium. Ouch.
Disregard shrill complaints from ObamaCare partisans like Zeke Emanuel that reforming Medicaid is “cruel.” The repeal bill protects Americans who need Medicaid, grandfathering in everyone enrolled through 2019. No one will lose coverage. But states are put on an allowance after 2019. Medicaid reform is long overdue, and this repeal bill launches it.
Individual insurance buyers. Finally, if you’re one of the 19 million people who buy insurance in the individual market, you’ll find all the protections of ObamaCare are preserved, including banning lifetime and annual-payment caps and penalties for pre-existing conditions. True, subsidies for lower-income buyers are smaller.
But the most newsworthy innovation is a multibillion-dollar fund that states can use to reduce premiums. States will pay the costs of the sickest insurance customers, so that premiums paid by healthy customers can stay reasonable. That feature has been ignored by the media and repeal critics, but it’s a keeper. With adequate funding, it has the potential to deliver what ObamaCare never did: affordability.
Betsy McCaughey is a senior fellow at the London Center for Policy Research.