Tags: Healthcare Reform | ahca | trumpcare | obamacare | health | insurance

Why the AHCA Was Doomed From the Start

Why the AHCA Was Doomed From the Start

By    |   Wednesday, 02 August 2017 12:26 PM

Would the House GOP's Obamacare replacement have given you a bigger tax break? The short answer is no, but the devil is in the details.

On Thursday, July 17, Trump’s American Health Care Act was pronounced dead late that evening.

Not only is the original design of the bill flawed, it was destined to fail because the Republicans who pushed it weren’t interested in passing anything of substance and tried selling it on a faulty premise.

The American Health Care Act isn't really a tax cut

At a cursory level, the AHCA doesn't slash anyone's taxes; it just repeals taxes signed into law under Obamacare.

The White House said that repealing Obamacare will cut taxes by $1 trillion over the next decade. To put this figure in perspective, Warren Buffett, the billionaire chairman of Berkshire Hathaway, said that his tax liability would've been 17 percent lower.

Here's a list of the regulations and taxes that the AHCA would either decrease or repeal altogether:

  • Individual mandate to buy health coverage
  • Employer mandate to offer health coverage to full-time employees
  • Surcharge on "Cadillac" health plans
  • 3.8 percent increase in Medicare payroll taxes for high-income earners
  • 3.8 percent net investment income tax for high-income earners
  • Tanning bed taxes
  • Health insurer taxes
  • Pharmaceutical company taxes
  • Excise tax on sales of medical devices
  • Repeal of health savings account exclusions for out-of-pocket expenses
  • 20 percent tax on HSA distributions
  • Deduction limits on flexible spending account contributions
  • Deduction limit on salaries in excess of $1 million
  • Deduction limits for medical expenses

According to the White House, these repealed or substantially lowered taxes total $1 trillion, all of which merely return taxes to pre-Obamacare rates.

Putting insurance back in health insurance

Insurance is a product you purchase in case something bad happens, but what if you don't use it? This is the fundamental issue with the high cost of Obamacare and health care overall.

For example, if you had a small business in 2009 and a family of five, a comprehensive health insurance plan used to cost about $13,000 to $15,000 per year. Under Obamacare, a family health plan with the same benefits costs about $30,000 per year, so how did the price double?

Increased taxes are a big part of the reason why the cost of health insurance has doubled. Someone has to pay for those taxes. That someone is you. In the real world of business, the price tag for Obamacare taxes trickles down to consumers who cannot afford it.

The Bush Administration did it best with their high deductible health insurance coupled with Health Savings Accounts. That plan had a $5,600 deductible, and coupled with premiums was a total of less than $10,000 per year. Now with a high deductible plan under Obamacare, health insurance essentially does not kick in until you have already spent about $30,000. What’s the point of even having health insurance in that case?

What about single-payer health reforms?

The AHCA isn't the answer, but neither are borderline-socialist, single-payer health reforms. The idea of single-payer health reforms is so bad that even California and Colorado have rejected recent proposals, but there is a better way.

Among all the pre-Obamacare turmoil, Pete Stark (D-California) introduced the AmeriCare Health Care Act of 2009. This proposal now seems like the next best option. As lawmakers continue to pull scrapped health care reforms out of the waste basket, expect AmeriCare to get a second look.

AmeriCare would be different from Obamacare and the AHCA by:

  • Providing a robust public option, not a mandate
  • Automatically enrolling all Americans at birth
  • Offering the choice to opt-out
  • Paying the same reimbursement rates as Medicare
  • Giving Americans a $300 deductible for individuals, $500 for families
  • Capping out-of-pocket costs at $2,500 for individuals, $4,000 for families
  • Covering low-income earners below twice the poverty line
  • Incentivizing employers to buy in and pay only 80 percent of health insurance premium costs

All of these proposals would be better than the recently proposed ideas.

The GOPs top failure in the AHCA was to cover those with pre-existing conditions. If someone is born with a condition, they should be allowed access to health insurance. However, there should be some other type of coverage made available for those who do not have insurance but find themselves needing it. For example, you cannot go out and buy insurance right after you become sick. These people should have another option or pay the price.

The takeaway is: there are viable options other than Obamacare or the AHCA. The so-called tax cuts under the House GOP's AHCA aren't the only benefit of repealing Obamacare. What matters most is putting the insurance back in health insurance and building a system that works for all Americans.

Chris Markowski has carried the titles of author, investment banker, equity analyst, and consumer advocate. He is the personality behind Watchdog on Wall Street and founder of Markowski Investments. Chris Markowski’s latest white paper “Emergency: Prepare Now for the Retirement Crisis” is now available! Download your free copy now.

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Would the House GOP's Obamacare replacement have given you a bigger tax break? The short answer is no, but the devil is in the details.
ahca, trumpcare, obamacare, health, insurance
Wednesday, 02 August 2017 12:26 PM
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