What the Repeal Bill Actually Says

Posted: Mar 15, 2017 12:01 AM
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Ignore the grandstanding on Capitol Hill and the noisy 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 insurance costs. The repeal bill -- 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.

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. The Affordable Care Act forced all but the smallest employers to provide a benefits package far costlier than what they had been offering prior to the ACA. Employers passed these costs onto workers, raising deductibles by 50 percent since 2011 on about 155 million people.

Other employers dropped coverage altogether for millions of workers. Only in Washington, D.C., would an employer mandate result in fewer people getting on-the-job coverage.

Still other employers -- like community colleges and fast-food outlets -- demoted workers to part-time status (below 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 repeal, 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 the Affordable Care Act. Medicaid now covers 74 million people. The ACA encouraged states to expand enrollment by promising that the federal government would pay 90 percent to 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 -- without improving health measures like blood pressure control.

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 on 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 buys 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.