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Tax credits cut in current GOP ACA ‘replacement,’ study finds

Mar 1, 2017

tax credits Kaiser Family FoundationTax credits for health care would take a hit, now and in the future, under Republicans’ current draft of a plan to replace the Affordable Care Act, or Obamacare. That’s the finding of a new study from the Kaiser Family Foundation.

A news release issued this morning from KFF this morning details the study. It says, “The average health insurance premium tax credit received by consumers in 2020 would be at least 36 percent lower under replacement proposals being discussed by Republicans in Congress than under the Affordable Care Act,

“The analysis find the average tax credit also would increase more slowly under replacement proposals.

In the “House Discussion Draft” alternative to the ACA, the average tax credit for current ACA marketplace enrollees would rise from an estimated $2,957 in 2020 to $3,729 in 2027. By comparison, the average tax credit under the ACA would be $4,615 in 2020, increasing to $6,648 in 2027.

“This analysis focuses on alternative ways to provide premium assistance for people purchasing individual market coverage, explaining how they work, providing examples of how they’re calculated, and presenting estimates of how assistance overall would change for current ACA marketplace enrollees.  Issues relating to changing Medicaid or methods of subsidizing cost-sharing will be addressed in other analyses,” the KFF said.

Study’s look at health insurance premium tax credits

The survey continues:

“The ACA and leading replacement proposals rely on refundable tax credits. … The House Leadership proposal, “A Better Way,” proposes refundable tax credits which vary with age but not income and grow annually with inflation.  The Empowering Patients First Act, proposed by Representative Tom Price, who is the new Secretary of Health and Human Services, takes a similar approach, as does the House Discussion Draft bill recently described in media reports.  The tax credits under the ACA vary with family income and the cost of insurance where people live, as well as age, and grow annually if premiums increase.

“These various tax credit approaches can have quite different implications for different groups of individual market purchasers.  For example, the tax credits under the ACA are higher for people with lower incomes than for people with higher incomes, and no credit is provided for individuals with incomes over 400% of poverty.  The replacement proposals, in contrast, do not vary the credit amount with income and so would provide relatively more assistance to people with higher incomes.  Similarly, the ACA tax credits are relatively higher in areas with higher premiums, while the replacement proposal credits do not vary by location.  If premiums grow more rapidly than inflation over time (which they generally have), the replacement proposal tax credits will grow more slowly than those provided under the ACA.

Read the full Kaiser Family Foundation study at: new analysis from the Kaiser Family Foundation.