Avik Roy has a highly informative article in Forbes, discussing the pros and cons of the recent House health care bill (which is now before the Senate). He suggests that the proposal offers a number of improvements over the current regime (Obamacare), but also some flaws. One problem is the tax credits:
Unfortunately, the A-plus on the regulatory side is balanced out by a C-minus on the tax credit side. House Speaker Paul Ryan adamantly opposed a means-tested approach to providing financial assistance for premiums, instead insisting on a flat tax credit that remains the same if you're at the poverty line or nearing six figures.
That approach means that millions of low-income Americans in their fifties and sixties will be priced out of the insurance market, while millions of upper-income Americans who don't need the help will get a big tax credit. Many of the people adversely affected by the AHCA are Trump voters whose favored candidate campaigned on "insurance for everybody."
Furthermore, the Ryancare tax credit will trap millions in poverty, by slapping them with thousands of dollars in health insurance premiums should they make enough to no longer be eligible for Medicaid. That will discourage the poor from working and rejoining the economy.
On top of all that, Ryancare does nothing to reform the unlimited tax break for employer-based coverage that does so much to make insurance unaffordable for everyone. Indeed, the bill takes Obamacare's "Cadillac Tax," an imperfect reform in the right direction, and pushes it back to 2023.
He then discusses some problems with the Medicaid reforms. Roy then concludes with a discussion of how the Senate might improve the bill:
A working group of a dozen GOP senators, derived from the key Senate health care committees--Finance; Health, Education, Labor, and Pensions; and Budget--has been meeting for weeks to contemplate how the Senate should proceed.
That could be a good thing or a bad thing. The best-case scenario is that the Senate builds on the House's Medicaid reforms while replacing the Ryancare tax credits with a more means-tested version.
One worst-case scenario is that the Senate simply waters down the reforms in the House bill for a result much closer to the status quo.
Another worst-case scenario would be for the Senate to pass the House bill as is. That bill, if it were enacted into law, would price millions of lower-income Americans out of their coverage.
Not only would that policy result threaten GOP majorities in Congress and across the country, it would damage the credibility of free-market health reforms for a generation.
We'll know soon enough which path the Senate has chosen.
I'll watch these issues closely as the Senate starts to deliberate on this issue. I'm generally an optimist, but not when it comes to Congress doing the right thing.
PS. For me, the delay in the Cadillac tax was the deal breaker, which showed that the House GOP was not willing to challenge the medical industrial complex that has wrapped its tentacles around 18% of our GDP.