The Republican health care bill, officially called The American Health Care Act or AHCA, is scheduled for a vote in the House this Thursday. HCFANY reviewed the many ways in which this bill will hurt New Yorkers in a webinar last week (you can find the recording here).Since last week we’ve looked deeper into the tax cuts included in the bill.
One of the most striking characteristics of the AHCA is just how much its benefits are concentrated onto a small group of the highest earners. The AHCA includes almost $600 billion in tax cuts, made possible by cutting over $300 billion in tax credits to help middle-class people buy insurance and by drastic changes to the Medicaid program. However, a closer look at the AHCA suggests that its tax breaks are reserved for a very few of the country’s highest earners.
Top 3 AHCA Tax Cuts
|Repealed Tax||How It Works Now||Tax Cuts (billions)|
|Net Investment Tax||People earning over $200,000 (or married couples earning over $250,000) would pay 3.8% on interest, dividends, rents, or royalties starting in 2018.||$157.6|
|Health Insurance Tax||Insurance companies would divide a fixed amount by their market share starting in 2018.||$144.7|
|Medicare Tax Increase||People earning over $200,000 (or married couples earning over $250,000) would start paying .9% on earned income for the Medicare program in 2018||$117.3|
The Net Investment Tax and the Medicare Tax Increase only apply to households earning over $200,000 – that’s only 5 percent of households in the United States. And most of that money – 80 percent – would be money saved for households earning over $1 million a year. On average, those millionaires would save almost $50,000 of off their tax bill. People who support repealing the Health Insurance Tax argue that it will help consumers and not just health insurance companies because the costs are passed onto consumers – but HCFANY looks closely at how health insurers in New York determine prices every year, and taxes are simply not a major part of those premiums.
There are other tax cuts in the bill that could provide small benefits to middle-class people, but the amount of taxes middle-class people will save, if any, are dwarfed by the additional costs created by the bill. An amendment that was added to the bill last night is getting a lot of press attention for reducing property taxes in Upstate New York, but even its supporters are saying it would only save people an average of $349. But costs for people who buy their own insurance are going to increase much more than that. For example, WalletHub looked at the difference in premium assistance provided to average individuals in cities across the United States, and found the following:
Average Premium Assistance Provided by the ACA versus the AHCA
|ACA||AHCA||Average Increase in Premium Costs to Consumers|
New Yorkers should not let themselves get fooled by efforts to market this bill as anything other than a transfer of resources from people with the least to people with the most. Most of New York’s leaders understand that and have said that they will vote “no” on the AHCA – they need to keep hearing from us until this bill is defeated.