Opinion

Opinion | Jon Kingsdale

Health bill isn’t reform; it’s a tax cut for the wealthy

Christopher Serra for The Boston Globe

Massachusetts launched national health reform in 2006, when a moderate Republican governor and liberal Democratic legislature worked together to get nearly everyone covered. We soon increased coverage to 97 percent, without unduly disrupting existing insurance arrangements or igniting runaway premium hikes.

Under Barack Obama, the Affordable Care Act adapted the Massachusetts model, and it now covers 22 million formerly uninsured Americans. But congressional Republicans are attacking national health reform and are seeking to destroy the ACA, not reform it.

If they succeed, a moderate Republican governor and a liberal state legislature will soon face the choice of undoing coverage or once again leading the country on health reform. The Republican bill — called the American Health Care Act — is not health reform. It is a tax cut for the wealthy and a cap on federal spending, which promises to “uncover” some 24 million Americans.

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Most of the changes proposed by the bill consist of rolling back a dozen or so taxes on everything from drugs to tanning salons. These include the tax penalty for not having health insurance, an essential incentive for coverage. But half of the $592 billion in cuts (2017-2026) come from eliminating two revenue measures that fall almost exclusively on the wealthy. They are a 3.8 percent investment income tax on capital gains and .9 percent Medicare payroll surtax on incomes above $200,000/$250,000 (single/dual filers). Over half of the money from these two tax cuts would go back to households earning more than $1 million per year.

On the other hand, the Republican bill proposes to cut the average federal premium subsidy by 36 percent, and much more for the near-poor (100 percent to 200 percent of the federal poverty level). For the truly poor, the bill will cap federal spending on Medicaid.

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Promoting block grants and work requirements for Medicaid goes far beyond undoing the ACA’s eligibility expansion. In the name of “repeal,” congressional Republicans would alter the entire Medicaid program, including the 42 percent of Medicaid dollars spent on seniors and the disabled — programs that were not even touched by the ACA. They are using repeal as political cover to attack Medicaid.

Of course, accessing health insurance is largely a matter of affordability, and the uninsured are overwhelmingly concentrated at the lower end of the income distribution. So, cutting their premium subsidies will price coverage out of reach for most, and capping federal support for Medicaid will force states to cut access to care still further.

The politics of the bill are clear: In the name of replacing what Republicans condemn as “failed” reforms, we get a massive tax cut for the upper class and a benefit claw-back from the poor.

The bill’s failure as health reform will be starkly evident in the nation’s growing number of uninsured. History cannot be undone; “repeal and replace” will be judged against the bar of 22 million newly insured, set by the ACA.

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Massachusetts will face a difficult choice: whether to step into the federal funding role now being abandoned or to fall in line behind repeal.

We retain our own individual mandate, and Governor Baker has even proposed reinstating the state’s requirement that employers down to the size of 10 employees offer group insurance. But we cannot morally or practically force residents to buy coverage without offering adequate premium subsidies for lower-income households. So our choice will be stark: Either eliminate the individual mandate in state law and give up on near-universal coverage, or step into the federal funding breach.

Massachusetts already supplements the ACA’s federal premium subsidies. With enough state subsidy, plus our state’s pre-ACA individual mandate, the proposed employer mandate, and an earnest commitment to actually reducing Massachusetts’ medical costs and premiums, we can maintain near-universal coverage. Fiscally, it will be challenging. To help with state premium subsidies, we may need to compromise the richness of minimum required benefits and actually control medical costs as well. Politically, this will be an enormous lift.

But we don’t need to search for new policy formulations — to retain coverage requires only the will to maintain funding and really contain costs. If we commit to do so, we will once again be a beacon for the rest of the nation.

Jon Kingsdale, associate professor of the practice at Boston University School of Public Health, is the founding executive director of the Mass. Health Connector.
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