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The GOP Fix for Obamacare: Rich Get Tax Breaks While Millions of Others Lose Healthcare

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House Republicans have unveiled long-awaited legislation to repeal much of the Affordable Care Act—also known as Obamacare—including its expansion of the Medicaid program for the poor. The proposal includes a large tax break for insurance companies that pay their CEOs over $500,000 per year. It also defunds Planned Parenthood and eliminates abortion coverage. The Republican proposal does retain Obamacare’s requirement that insurers cover people with pre-existing conditions. However, it scraps the revenue-generating mechanism that makes this possible: the individual mandate, which required all Americans to sign up for health insurance or pay a fee. President Donald Trump and fellow Republicans have repeatedly promised to repeal and replace Obamacare, but their efforts have faced internal divisions as well as sustained outcry from constituents at town hall meetings across the country. For more, we speak with John McDonough, professor at the Harvard T.H. Chan School of Public Health. He is the former executive director of Health Care for All in Massachusetts, which played a key role in the passage of the 2006 Massachusetts health reform law.

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This is a rush transcript. Copy may not be in its final form.

JUAN GONZÁLEZ: House Republicans have unveiled long-awaited legislation to repeal much of the Affordable Care Act, also known as Obamacare, including its expansion of the Medicaid program for the poor. The proposal includes a large tax break for insurance companies that pay their CEOs over $500,000 per year. It also defunds Planned Parenthood and eliminates abortion coverage. The Republican proposal does retain Obamacare’s requirement that insurers cover people with pre-existing conditions. However, it scraps the revenue-generating mechanism that makes this possible: the individual mandate, which required all Americans to sign up for health insurance or pay a fee.

It is unclear if the bill has enough support to pass the Republican-led Congress. It now goes to two House committees for review. During a speech last week, President Trump urged Congress to repeal Obamacare.

PRESIDENT DONALD TRUMP: Tonight I am also calling on this Congress to repeal and replace Obamacare with reforms that expand choice, increase access, lower costs and at the same time provide better healthcare. Mandating every American to buy government-approved health insurance was never the right solution for our country.

AMY GOODMAN: President Trump and fellow Republicans have repeatedly promised to repeal and replace Obamacare, but their efforts have faced internal divisions as well as sustained outcry from constituents at town hall meetings across the country.

For more on the future of healthcare, we go to Boston, where we’re joined by John McDonough, professor at the Harvard School of Public Health. He is the former executive director of Health Care for All in Massachusetts, which played a key role in the passage of the 2006 Massachusetts health reform bill, which was known as Romneycare. He later became a top aide to the late Senator Ted Kennedy and worked on the development and passage of the Affordable Care Act. He’s also author of the book Inside National Health Reform.

Professor John McDonough, welcome to Democracy Now! Your assessment of what has been released so far?

JOHN McDONOUGH: What we see so far is not a surprise, and it’s been revealed in bits and pieces along the way. The Republican plan represents a massive tax cut to benefit wealthy households and powerful corporations in America. And in exchange, a significant number of millions of Americans, lower-income and lower-middle-income, are going to lose their health insurance coverage to make up for the lost revenue from these tax cuts.

JUAN GONZÁLEZ: Well, in what way do you say it’s a tax cut for the wealthy?

JOHN McDONOUGH: So, the Affordable Care Act is significantly financed—and most people don’t know this—by a major tax increase on wealthy households, both on earned income and on unearned income. And it has been a major target, although they don’t talk about it a lot, of Republicans to repeal these tax cuts. And just to give you some perspective on this, the bill that the Republicans put out would repeal these taxes. The 400 wealthiest households in America, because of this tax cut, will see annual tax cuts of $7 million per household. The 160 million households with incomes below $200,000 will get zero from this, except some 10 [million] to 20 million will lose health insurance coverage because of this law.

JUAN GONZÁLEZ: Well, another feature of the proposal appears to be dealing, clearly, with Medicaid and turning the expansion of Medicaid under Obamacare for a greater number of low-income individuals into block grants that then would be capped. So, in essence, the states would, at one point or another, then face a cap on federal aid under Medicaid.

JOHN McDONOUGH: Yes, absolutely. And the Republican agenda is to try and shrink the federal obligation to low-income coverage through Medicaid as much as they can. This has been a tough balancing act for them, because 31 states expanded Medicaid to about 10 million low-income Americans, 10 [million] to 11 million. And there’s been a real struggle, because about half of those states are now represented by Republican governors, who do not want to see the dramatic losses in coverage that the Republicans would like to achieve if they were able to do what their instincts were leading them to do. So, there’s tension in the party. The conservatives want to see a much more drastic cut to Medicaid. The more moderate or less conservative Republicans from states that expanded are unwilling to see a wholesale throwing off of hundreds of thousands or millions of people from coverage. And so, the speaker, Ryan, and his team are really trying to walk a tightrope between those two sides. But either way, we’re looking, over years, in the significant reduction in the number of Americans covered through Medicaid.

By the way, we don’t have precise numbers on this, because the Republicans are pushing this forward before the Congressional Budget Office has put out a score, both in terms of cost and coverage losses. So, we are a little bit—we’ll probably learn within the next week to two weeks of what these numbers are, but right now we’re just doing our best estimating. But the trend is clear: fewer vulnerable Americans with health insurance and bigger tax cuts for wealthy Americans and for powerful companies.

AMY GOODMAN: Professor McDonough, can you explain age rating and what this means?

JOHN McDONOUGH: So, the Affordable Care Act created tax credits—they’re often referred to as subsidies—to enable people, sort of lower-middle-income people above Medicaid eligibility, to be able to get health insurance coverage. Republicans are also proposing tax credits for Americans who can’t get coverage elsewhere. The big difference is, the ACA has income—has tax credits that are income-adjusted, so the lower your income, the more generous the tax credit. And as you go up the income ladder, it scales out, and at four times the poverty level, you get no more support from those tax credits. Republicans are saying, "Let’s just create a flat tax credit, and it varies only by your age, whether you’re in your twenties, in which you get a $2,000 credit, up to your sixties, where you would get a $4,000 credit." In all of those cases, the support that you would get would be significantly less than what you would obtain under the ACA income tax credits for the people who need it the most, which is the people with less income. So, the new tax credits are a little bit like giving a six-foot ladder for someone to get out of a 20-foot hole. Most of the people who are getting coverage right now through the ACA will not be able to afford to buy coverage with the Republican-envisioned tax credits that no longer take account of your income, only your age.

JUAN GONZÁLEZ: I wanted to ask you about another section of the proposal called the continuous coverage provision.

JOHN McDONOUGH: Yes.

JUAN GONZÁLEZ: Apparently, this is a replacement for—to some degree, for the mandate. But under the old mandate, people would have to pay a fine, if they didn’t have insurance, to the government. What happens now under this continuous coverage provision?

JOHN McDONOUGH: You’re right. So, the so-called individual mandate in the ACA is by and far the least popular part, although it is essential for guaranteed issue and eliminating pre-existing conditions. But the current ACA mandate basically is a—it’s not a mandate. You don’t have to buy coverage; however, if you don’t buy coverage and you’re able to afford it, then you face a tax penalty, when you pay your taxes, of up to $695 for a full year without coverage or a percent of your income.

The Republican plan gets rid of that. It reduces all those penalties to zero. And it puts in place a different kind of a penalty. And the penalty says that if in the prior year, in the prior 12 months, you had a gap in health insurance coverage of more than 63 days, then when you go back to buy health insurance, you will pay a premium on top of your premium that will represent 30 percent more. So let’s say that I want to—I had a gap in coverage, and I want to buy health insurance in the following year, and I want to buy an individual policy that costs me, let’s say, $7,500 in a premium. So I would pay on top of that a penalty of an additional $2,200.

So the maximum penalty under the ACA is $695. But you’re looking at a penalty here right now, to replace the individual mandate, that is significantly more punitive and more difficult and will in fact keep many Americans from being able to get back and buy health insurance once they’ve had coverage. And there’s no hardship exemption. There is nothing. This is on everybody, if you had a gap in coverage of more than 63 days. So it will be a real impediment from people who say, "OK, I’m ready now. I’m able to afford it, and I want to buy health insurance coverage." It’s not making it easier for people to get coverage; it’s making it harder.

JUAN GONZÁLEZ: And there’s also a difference, isn’t there, in that the penalty under the Affordable Care Act went to the government to supposedly—

JOHN McDONOUGH: That’s right.

JUAN GONZÁLEZ: —help defray the costs of the overall plan? But this additional premium would go to the insurance companies, not to the government—

JOHN McDONOUGH: Absolutely.

JUAN GONZÁLEZ: —to basically help their bottom line, right?

JOHN McDONOUGH: Enough said.

AMY GOODMAN: And what about—what about reproductive rights, Professor McDonough?

JOHN McDONOUGH: Yeah, so, in addition, the bill that’s being promoted by the Republican leadership will eliminate funding for Planned Parenthood very quickly, all funding for all services. There is no federal funding that goes to Planned Parenthood for abortion, but this would eliminate all funding for any service to this one organization called Planned Parenthood, which is a significant political risk for them, because already there are at least two Republican senators, Susan Collins from Maine and Lisa Murkowski from Alaska, who have said they will not vote for a bill that eliminates funding for Planned Parenthood. And Republicans can only lose three votes in the Senate. They got a letter the other day from four senators saying that the House treatment of Medicaid is unacceptable, and they could not support that bill. So, it’s uncertain in the House politically, and it’s highly uncertain what’s going to happen to this plan over in the Senate.

JUAN GONZÁLEZ: I wanted to ask you about some of the more bizarre provisions of this bill. I understand it’s a 66-page bill, which the Republicans are actually touting, compared to the hundreds of pages of the original Affordable Care Act. But seven pages, or more than 10 percent, of the bill are dedicated to excluding lottery winners from the health—from the insurance? Can you explain that?

JOHN McDONOUGH: So, I—that’s one of those little curious tales that journalists will ferret out in the next couple of days. I am honestly not sure where that came from, except that, clearly, they had some advocacy from some lottery winners around this, and so there is an exclusion of lottery winners in terms of when they can get Medicaid and when they can’t. And it is bizarre to focus that much on it. But I’m sure there’s a tale behind that in terms of how that got in there.

AMY GOODMAN: In seeing people fan out to talk about this, the watchword, the buzzword, is "accessibility": People will have access to healthcare. But that’s not the same as people will be able to afford healthcare. So, overall, what is the takeaway you have right now? I mean, it was just released yesterday. As you said—and this is not a minor point—it hasn’t even been scored. What did it take—two years?—for you guys to figure out how much this was going to cost? Could it cost actually more, overall, for the country?

JOHN McDONOUGH: Well, it could. But I think that there are other parts of the ACA that remain untouched that have significant economic consequences. So, a big piece of the financing of the ACA represented substantial reductions in the Medicare program to healthcare providers—to hospitals, to home health agencies, to insurance companies in the Medicare Advantage program. And so, a significant—it’s about half the cost of the law was through reductions in Medicare payments. And for the most part, particularly from the hospitals—hospitals are giving up about $350 billion in revenue that they would otherwise collect, because they wanted to make a serious, real contribution to getting most of America to have health insurance. The hospital industry is now deeply alarmed and is ringing a lot of alarms, saying, "Hey, we gave up an enormous amount of money, $350 billion over 10 years, in order to get America covered with health insurance." And they are saying, "Listen, if you want to take away that coverage, then we want our money back." But Republicans are not planning on giving that money back, so they are going to be taking away the coverage, and they’re going to be leaving the cuts in place for hospitals, who are going to be on the front line of dealing with the millions of Americans who will be newly uninsured because of this law.

So, because they leave that money in place, it will not be challenging for this bill to in fact be—will be fiscally neutral and will not add to the deficit. I don’t anticipate that, because they’re leaving that whole other part of the law. So, they’re repealing each and every tax increase in the ACA, including things that you just wonder what was on their mind. There’s a tax on indoor tanning salons, which is a significant cause of skin cancer and melanoma and other serious skin cancers. But they leave in place all of the reductions to the medical providers who are on the sharp end of care. So, I wouldn’t expect this to be a deficit increaser. But, of course, we’ll see when the Congressional Budget Office score comes out in the next couple of weeks.

AMY GOODMAN: John McDonough, we want to thank you for being with us, professor at the Harvard Chan School of Public Health. Between 2008 and '10, he served as senior adviser on national health reform to the U.S. Senate Committee on Health, Education, Labor and Pensions, was a top aide to the late Senator Ted Kennedy. This is Democracy Now! We'll be back in a minute.

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