Wednesday, July 5, 2017

22: Percentage of Medicaid funding restored by restoring the ACA investment tax

22 is another significant digit this morning - for a couple of reasons.

Greg Sargent (Washington Post/Plum Line) reports that If this scam works as planned, Republicans could still destroy Obamacare.

What he calls the scam is the GOP move to restore one of the tax breaks in the Senate repeal-and-replace bill.

One key battleground right now is the question of whether GOP leaders will try to woo … moderates by getting rid of the GOP bill’s repeal of one of the ACA’s big taxes on the wealthy: the tax on investment income, which hits top earners. …

But here’s the thing: Even if Republicans do restore the investment tax, it could have a relatively minuscule impact on the overall loss of coverage the GOP bill would produce. Indeed, it might only restore a meager 22 percent of the Medicaid funding, according to one expert I spoke with.

A Tax Policy Center analysis found that more than two-thirds of the Senate bill’s tax cuts would go to earners in the top fifth of the income distribution. One of these tax cuts is accomplished by repealing the 3.8 percent tax on net income investments, which hits those over $200,000. The Senate GOP bill would cut spending on Medicaid by $772 billion over 10 years, leaving 15 million fewer covered by that program (22 million overall would lose coverage). …

Moderate Republicans do indeed have a problem on their hands. They have now conceded the GOP bill’s deeply regressive nature — they have conceded that the bill cuts enormous sums from health-care spending on the poor to finance big tax cuts for the rich. As Brian Beutler notes, by conceding this ground, they have made it harder for themselves to accept a small restoration of that spending via a limited restoration of the taxes on the wealthy, because this “places Republicans in the unenviable position of pinpointing just how many people should lose health care to finance specific tax cuts for the affluent.” In this scenario, the answer would still likely be: enormous numbers of people, numbering in the double-digit millions.

Of course, if this tax on investments is restored, and the money is plowed back into Medicaid or subsidies, or some combination of the two, it’s perfectly plausible that these moderates will claim that their objections went very far in mitigating the bill and the human toll it is likely to produce over time. But if so, when placed in the larger scheme of coverage loss that the GOP bill would engineer, that will basically be a scam.

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