Did the Tax Bill Really Repeal ObamaCare?

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This week’s health policy roundup, curated by Dr. Jane M. Orient.

President Trump claims it did, and its opponents say it has destroyed the “centerpiece”—the individual mandate. In 2019, the IRS can no longer penalize people for not having an ObamaCare-compliant health plan.

Repealing this provision is estimated to “give” Republicans $338 billion over a decade to “fund tax cuts,” according to the Congressional Budget Office (CBO). It is also supposed to make passage of a future bill easier by disposing of a major reason that CBO projected that fewer people would be covered than under ObamaCare. https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2017/12/01/the-health-202-obamacare-s-centerpiece-is-hanging-by-a-thread/5a20554830fb0469e883f95b/?utm_term=.08ff7da2fbb0

Zeroing out the individual mandate penalty is a tax break for the poor. In ten states, 40% or more of residents eligible to purchase individual policies chose to pay the tax instead. In 2015, 6.7 million taxpayers paid a total of $3 billion in penalties. More than 37% of them had an income less than $25,000, and more than 78% had an income less than $50,000. Thus, the poor pay a disproportionate share of the ObamaCare tax penalty. http://thefederalist.com/2017/12/01/repealing-individual-mandate-tax-break-poor/

The tax bill did not get rid of the “Cadillac tax”—a 40% excise tax on “Cadillac” insurance plans offered by employers—specifically, on any premiums that exceed $27,500 a year for family coverage. The idea was to give employers an incentive to cut costs. It was ObamaCare’s most promising cost-control provision, write Joseph Antos and James Capretta, but it was poorly designed because it would hit low-salaried workers as hard as CEOs. It wasn’t scheduled to kick in until 2018—four years after the rest of ObamaCare—because of union opposition and Democratic ambivalence. Then a 2015 law delayed it until 2020. Both parties would like to kill the tax before it goes into effect. (WSJ 12/20/17, https://www.wsj.com/articles/obamacares-failed-cost-controls-1513812078)

Also, the insurance subsidies and the Medicaid expansion are still there. https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2017/12/21/the-health-202-a-eulogy-for-the-individual-mandate/5a3a94d430fb0469e883fd24/

Indeed, The number of Medicaid beneficiaries enrolled in managed care plans rose by 1 million this year to nearly 55 million. https://www.forbes.com/sites/brucejapsen/2017/10/31/insurers-add-one-million-medicaid-patients-amid-failed-obamacare-repeals/#58569d032620

Free bronze plan options are available for those earning 150% of the federal poverty level ($18.090 for an individual or $36,900 for a family of four) in nearly all U.S. counties with marketplaces operated by Healthcare.gov. Although premiums have soared for those earning too much for a subsidy, people eligible for virtually free coverage are enrolling energetically, even though the Trump Administration cut the $100 million in advertising spent by Obama last year. https://www.washingtonpost.com/news/powerpost/paloma/the-health-202/2017/12/14/the-health-202-obamacare-enrollment-sprints-toward-the-finish-line/5a31670c30fb0469e883fb83/

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