GOP Obamacare Replacement: Fact vs. Fiction

Since House Republicans released their Obamacare repeal-and-replace plan, there has been much criticism—informed and uninformed—about what the legislation would and won’t do. Part of the problem with such commentary is that the legislation and accompanying multi-part strategy are not well understood.

Fiction: The American Health Care Act is a massive tax increase for most people and a tax cut for wealthy people.

Fact: The House GOP replacement legislation would be an $883 billion tax cut for Americans. This is a powerful contrast to Obamacare, which was built upon a promise that there would be no “form of tax increase” on Americans making less than $250,000. But, according to the U.S. Supreme Court, the law was in fact a significant tax hike.

As Americans for Tax Reform points out, there are a wide variety of tax relief components in this replacement bill. First, House Republicans would eliminate the individual mandate non-compliance tax, retroactive to December 31, 2015 (meaning those who paid the tax in 2016 would be eligible for a refund from the Internal Revenue Service).

Other tax repeals include: the HSA withdrawal tax; the 10 percent excise tax on indoor tanning; the health insurance tax; the employer mandate tax; the surtax on investment income; the payroll tax hike; the tax on medical device manufacturers; the tax on prescription medicine; the Obamacare elimination of the deduction for retiree prescription drug coverage; and the $500,000 annual executive compensation limit for health insurance executives.

Other tax repeals include: the HSA withdrawal tax; the 10 percent excise tax on indoor tanning; the health insurance tax; the employer mandate tax; the surtax on investment income; the payroll tax hike; the tax on medical device manufacturers; the tax on prescription medicine; the Obamacare elimination of the deduction for retiree prescription drug coverage; and the $500,000 annual executive compensation limit for health insurance executives.

Each of these Obamacare taxes has inflated the price of health care

Each of these Obamacare taxes has inflated the price of health care, both in out-of-pocket expenses for families and insurance costs passed on to patients in the form of higher premiums. The House GOP repeal and replace effort begins by easing the tax burden on families and employers, a signal that they believe affordability is the key to making health care accessible to all.

Fiction: 24 million people are going to lose their health care coverage under the GOP plan.

Fact: The Congressional Budget Office has a long history of inaccuracy with its estimates, both on cost and coverage. There is no greater example of this than how breathtakingly wrong CBO was on Obamacare. This is due, in part, to the office’s inability to do dynamic scoring, a method that would actually forecast the economic impact and federal ledger effects of legislation.

But, even assuming the CBO is correct that 24 million Americans would be uninsured on the GOP plan, the reality is that the majority of those patients will actually choose to leave Obamacare. CBO estimates that 14 million will voluntarily opt out of Obamacare once the individual mandate is repealed.

CBO estimates that 14 million will voluntarily opt out of Obamacare once the individual mandate is repealed.

This is significant because Democrats spent a great deal of political energy trying to convince the American people that they would be happy with Obamacare. But CBO projects many of them would abandon the program given the choice, which proves just how poorly their government takeover of health care is actually working.

Fiction: The GOP alternative to Obamacare will increase premium prices.

Fact: According to the CBO, the American Health Care Act would reduce premiums by an average of 10 percent. This is a dramatic departure from Obamacare’s drastic premium hikes that often double or triple the costs families must pay.

the American Health Care Act would reduce premiums by an average of 10 percent.

Fiction: The American Health Care Act doesn’t do enough to rein in entitlement spending.

Fact: The GOP plan would reduce the federal deficit by $337 billion over a decade. With a $587 billion deficit in 2016, the American Health Care Act would be a critical component of getting federal spending under control.

The legislation would also modernize Medicaid to better serve patients and work for taxpayers. In fact, it would save $880 billion over the course of the first decade, a welcome reprieve for a collapsing program that, combined with Medicare, takes up a quarter of the country’s federal budget. Without such reforms, Medicaid would be totally unsustainable for those who need it, as its enrollment is growing faster than the economy is.

Without such reforms, Medicaid would be totally unsustainable for those who need it, as its enrollment is growing faster than the economy is.

Fiction: Republicans are just going to repeal Obamacare, tinker with the tax code and do nothing to fix the fundamental problems with health care.

Fact: The fiscal parts of this package must be done through budget reconciliation, which may only address spending and funding. Policy changes work under a different set of rules. That’s why Republicans began with reducing government costs and slashing taxes on American families.

Next, the HHS Secretary can make more than 1,300 regulatory decisions. This authority was granted broadly in Obamacare, and it’s something Republicans are eager to use with new Secretary Tom Price, M.D. They hope to undo much of what was imposed by President Obama.

Finally, Republicans will need to propose meaningful reforms to the health care industry. This is what conservatives are most eager to see: association-based health care, interstate purchase of insurance and so on.

This is what conservatives are most eager to see: association-based health care, interstate purchase of insurance and so on.

But those are policy changes, and they require 60 votes in the Senate, a daunting task as Republicans hold a 52-seat majority. That means they’ll have to convince some Democrats that the structural modifications to health care are patient-centered approaches to driving down costs, improving accessibility and spurring enhanced quality of care. They’ve got hundreds of ideas on how to do this, and they’ll make their case to the American people and the colleagues who represent them that they’re vital to real health care reform.

Most importantly, a unified GOP is essential to passing the kinds of reforms conservatives crave. They must courageously advocate patient-centered, free market-driven health care reform, instead of merely opposing what the Left or congressional GOP leadership supports.

Bottom line: this is only the start of the repeal-and-replace fight. But President Trump promised a repeal of Obamacare in his first 100 days in office, and congressional Republicans ran on the same. Conservative unity is imperative to this battle, and with an accurate understanding of what it entails, they can join Speaker Ryan and other Republican leaders in this fight.

Ellen Carmichael is a senior writer for Opportunity Lives. Follow her on Twitter @ellencarmichael.