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Welcome to TrumpCare

Welcome to TrumpCare

If you’re worried about the Republicans’ plan to repeal and replace Obamacare, you may want to stop reading this post right now. It’s becoming increasingly clear that Congressional Republicans plan on repealing the law first, and then developing a replacement later. And once you understand that this is the path they’re set on, we can already predict with great certainty what comes next for American healthcare. 

Ladies and gentlemen, welcome to TrumpCare. 

It’s very simple: Congressional Republicans are going to use a process called budget reconciliation to take taxpayer dollars currently spent on helping the middle and working class afford healthcare and use it instead to fund massive tax cuts for the wealthy.

Sure, there a lot of details to work out in between about which aspects of Obamacare Republicans plan to ditch, what they want to save, and what they plan on putting forward their own proposals on. But the crucial fact is this: whatever Republicans plan on doing with Obamacare, they’re not going to have any money to pay for it. Maybe they do some deficit-financing to save the popular parts, but they simply won’t be able to conjure up the hundreds of billions of dollars it will take to give 20 million people the kind of healthcare they have now.

Remember, every aspect of Obamacare was paid for. For every dollar that flies out of the Treasury, another dollar comes in. So when Congressional Republicans take those dollars coming in and give them back to the wealthy, those dollars can’t be used on healthcare.

People forget Obamacare is one of the most progressive, redistributive laws passed in modern American history. It wasn’t designed to make us all magically healthier…it was to protect people from going bankrupt when they need treatment. That’s the entire point of health insurance. And Obamacare generates a lot of the revenue to help people afford health insurance from taxes on investments and incomes at the high end of the spectrum, as well as making cuts to the parts of the Medicare that were pretty bad investments for the American taxpayer.

Look at just one pay-for and it’s like you can see the future. Take Jonathan Cohn’s excellent summary over at Huffington Post of the investment taxes that help pay for Obamacare right now:

The other distinctive quality is that this surcharge includes investment income. That’s a big deal, since the rest of the Medicare tax covers wages only. Wealthy Americans are more likely than others to make a lot of money from stocks, real estate and other holdings, and that’s especially true for the richest of the richest.

For affected households with annual incomes in low six digits (between $200,000 and $500,000), the average tax increase upon the law’s implementation was just $467 a year, according to calculations by the Tax Policy Center. That worked out to an increase of 0.2 percent. Millionaires, however, faced a steeper increase. For filers with annual incomes above $1 million, the average tax increase was $36,310, or an increase of 1.2 percent.

They can afford that kind of money, for sure. But it’s safe to assume most of them would be happy not pay that tax anymore. Which is great, except that if the tax goes away, so will the revenue ― to the tune of $346 billion over the next 10 years, by the CBO’s reckoning.

 

Under TrumpCare, healthcare dollars will simply run the other way. Money that went to the middle and working class will get redistributed back to the folks who were formerly paying the tab. And that’s assuming Congressional Republicans simply go back to the way things were—something tells me they’ll take the opportunity to cut taxes even more for the well-off.

And that’s why any talk of a “replacement” to Obamacare is utter nonsense. The word replacement implies something nearly as good as the original. That won’t be happening here. The only way to pay for anything resembling healthcare for 20 million people is to increase taxes or make gigantic cuts elsewhere in the budget. And while Congressional Republicans talk a big game, they’ve never shown any interest in cutting Medicare, Social Security, or Defense spending. Even if Paul Ryan does succeed in voucherizing Medicare (I really doubt he has the votes for that), that money ain't going to help maintain Medicaid's expansion in the states. 

What you’re left with is a Republican “replacement” that Republicans will either just deficit-finance or cut Democratic-favored spending on education, social services, and, ironically, healthcare. And there’s no way that they can pick off the 8-10 Senate Democrats needed to overcome a filibuster.

And that’s what TrumpCare will be: crappier healthcare for the middle and working class, fewer taxes for the best off amongst us, and as volatile a healthcare system as you can imagine in the industrialized world. And that’s assuming a best case scenario where Congress is able to fix all the unintended consequences in healthcare markets that are sure to come with repeal. We haven't even begun to wrestle with the consequences of Medicaid being dramatically curtailed in the states. 

At least the name TrumpCare will be fitting--an underwhelming product that’s likely to go bust and leave good people to clean up the mess.   

 

The Alternative to Obamacare is Tax Cuts for the Wealthy

The Alternative to Obamacare is Tax Cuts for the Wealthy

The Insanely Favorable Politics of Repealing and Never Replacing Obamacare

The Insanely Favorable Politics of Repealing and Never Replacing Obamacare