There’s Another Monkey in the Wrench for Obamacare Repeal

JM Ashby
Written by JM Ashby

House Republican leadership leadership floated a possible Obamacare "replacement" plan last week that clearly will not have the support of the Freedom Caucus and possibly many other Republicans.

The Freedom Caucus voted among themselves last week to oppose any plan that doesn't fully repeal Obamacare including a full repeal of Medicaid expansion, but they also have a big problem with one element of the GOP's half-assed "replacement" plan.

They're not happy with the idea of providing tax credits.

"I don’t like the refundable tax credit," says Representative Ted Yoho of Florida. "I don’t want people getting money back." [...]

Representative Trent Franks of Arizona said tax credits "should be predicated on those taxes paid in, not a refundable tax credit, because it can so easily become a major and unstoppable entitlement." [...]

"I think there’s not the votes there to pass refundable tax credits," said Representative Mark Meadows of North Carolina, chairman of the Freedom Caucus of about 40 conservative members. He said it could be a "new entitlement program" and may be subject to fraud. [...]

Representative Dave Brat of Virginia said, "The refundable tax credit piece is problematic because then you’ll have health care run at the federal government level where everything is insolvent." And he said Democrats will "bid up" the tax credits over time.

Dave Brat's remarks may be especially maddening or comedic, depending on your perspective, because there's simply no way to replace Obamacare without creating a system that is essentially run by the federal government.

As for the others, there's no way to replace Obamacare without creating an "entitlement." There's no way to create a system that isn't at least minimally vulnerable to fraud, because everything in life is.

It strikes me that the conservative alternative to what Republicans are proposing is actually Obamacare as it exists today. You could say the current structure of the law actually minimizes government involvement while creating a new refundable tax credit could significantly increase government involvement. In the latter case, the government would effectively pay individuals for purchasing insurance, particularly those who claim a higher tax credit than they pay in taxes.

Unless there are strict limits put in place (ha!), a wealthy individual who purchases an extremely high value insurance plan could possibly deduct more money from their taxes than they pay in.

That would be quite a departure from the current system where high value plans are taxed. Under Ryan's plan, the wealthy would be reimbursed(!) for buying premium insurance.

I personally believe a refundable tax credit is a horrible idea for different reasons. A tax credit is of no use to people who cannot afford to pay for the cost of healthcare up front. This would also create new vulnerabilities for people who may be liable for unpaid taxes or debts.

Providing refundable tax credits for healthcare is such a bad idea it may unite the left and right in opposition to Paul Ryan.

  • ninjaf

    I came across this article yesterday which explained how repeal of the ACA is the first domino Republicans need in order to enact their tax plans. So, it makes me even happier to hear that it is looking less and less likely.
    Paul Ryan’s Dream of Tax Cuts for the Rich Will Not Be Denied

  • muselet

    Feed, cannibals! Feed!


  • Badgerite

    I’m sorry but we are watching a born rich, trust fund brat run up a tab on the taxpayers time to take trips to Florida and have his wife live in a high rise in New York and his kids go on business trips to foreign lands. Don’t talk to us “entitlements”.
    In one month, he has run up a higher tab than the Obama’s did in a year of travel. In one friggin month. All while destroying the reputation of the United States on the world stage.

  • Christopher Foxx

    says Representative Ted Yoho of Florida. “I don’t want people getting money back.”

    Spoken like a true Republican.

    “Taxes should be low. The government should not be taking the people’s money. People know what to do with their money better than the government, so the government shouldn’t be taking it from them. What? No, we’re not going to give any of it back.”

    • Draxiar

      Clever point! Of course, it depends on who is getting the money back. If you’re poor and need it to feed your kids, forget it. If you’re rich and will *ahem* “create jobs” then by all means, take back the money.

      • And for corporations, “don’t bother to pay in, we’ll pay you!”

  • Christopher Foxx

    He said it could be a “new entitlement program” and may be subject to fraud.

    They just love bringing up that particular bogeyman. “Oh, noes. We can’t do that. It might involve fraud.”

    It’s becoming one of their go-to excuses. “Can’t improve welfare, might lead to fraud.” “Can’t make it easier for lawfully registered citizens to vote, could lead to fraud.” “Can’t have an Ethics Committee, they might expose our fraud.”