Rs rewriting health bill to limit tax credit eligibility

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Based on my conversations with multiple sources close to the effort, the Congressional Budget Office (CBO) had indicated to congressional staff that the prior House framework could see at least 10 million, and potentially up to 20 million, individuals losing employer-sponsored health insurance. Further, CBO stated that that House framework, even after including a refundable tax credit for health insurance, would not cover many more people than repealing Obamacare outright.

By comparison, Obamacare led to about 7 million plan cancellation notices in the fall of 2013. While those cancellations caused a major political firestorm, the framework the House released prior to the recess could cause a loss of employer coverage of several times that number. What’s more, that framework as described looks for all intents and purposes like a legislative orphan appealing to no one—neither moderates nor conservatives—within the Republican party:

• A significant erosion of up to 10-20 million individuals with employer-provided health coverage;
• A new entitlement—the refundable tax credits—that by and large wouldn’t expand coverage, but instead cause individuals currently in employer plans to switch to the credits;
• More federal spending via the refundable tax credits;
• A tax increase—a cap on the current exclusion for employer-provided health coverage—to pay for the new spending on the credits; and
• An increase in the uninsured (compared to Obamacare) of at least 15 million—nearly as much as repealing the law outright.

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Moving to a means-tested credit would create the same disincentives to work—individuals taking fewer shifts, or working fewer hours, for fear of losing their subsidies—as Obamacare itself.

If House Republicans have turned on a dime, and re-embraced means-tested credits after criticizing them for several years, their plan will have at least some of the same work disincentives as Obamacare. Moreover, a means-tested credit also creates administrative complexities—reconciling payments made based on estimated income with actual income at the end of the year—that make it tougher to implement, as the Obamacare experience has demonstrated.

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