The Obamacare Replacement’s Purpose is to Lower Taxes on the Rich

This is one of those conclusions that’s kind of hiding in plain sight, but no one is talking about. The Republican replacement bill for Obamacare, abbreviated AHCA, is so terrible as a health care bill that it has been savaged by everyone who cares about health policy. For instance, doctors and hospitals, even down to conservative wonks and media have all come out against this plan. Conservatives hated Obamacare! Why can’t Republicans design a healthcare plan that at least makes them happy?

The reason is that the AHCA, despite its name and the coverage surrounding it, is not a healthcare bill at all. It is a tax cut bill. Paid for by slashing medical services and assistance.

This is the only lens through which this bill makes sense.  A bill that was concerned about health outcomes could have easily picked a few of these groups and made them happy. However, you can’t even do that when you spend all of your bill’s money on giving tax cuts to the rich. Here’s a breakdown of the plan spends money, per the Congressional Budget Office’s official score of the legislation:

AHCA spending

You can see that the main effect of this bill is to decrease federal spending on healthcare. It replaces Obamacare’s health insurance credits with new credits almost half their size while also taking a huge whack at Medicaid spending. Its no wonder that 24 million people will lose health insurance as a result of this plan.

The largest expenditure item is not even related to health care. It is tax cuts. I separated the tax cuts into two groups. The largest group are non-healthcare related tax cuts. They mostly consist of cuts for people making more than $200,000 per year, with some more for health insurers and other healthcare companies. The second, smaller group (Other Tax Repeals) includes the individual mandate and taxes on other employers, which in fairness, are related in health insurance.

The Center on Budget and Policy Priorities illustrates this dynamic by demonstrating how the top 400 richest Americans fare every year under this bill, versus 800,000 residents of our smaller states:

cbpp aca repeal taxes

If you judge this bill by the effect it has on healthcare in the US, then you will be very disappointed, because taking hundreds of billions of dollars out of our healthcare system will tend to make it worse. However, that is not how Speaker Paul Ryan judges bills. He judges them by their effect on rich people’s pocketbooks. And by that measure, this bill is a resounding success.

 

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