Harsh Tradeoff at Core of GOP Health Bill: Keep Medicaid Expansion or Cut Taxes for Wealthy?
Tax Cuts for 400 Highest-Income Households Exceed Cost of Maintaining Expansion in Most States
End Notes
[1] Chye-Ching Huang and Brandon DeBot, “House Health Bill: Tax Cuts for Wealthy, Insurers, and Drug Companies Paid for by Low- and Middle-Income Families,” Center on Budget and Policy Priorities, May 22, 2017, https://www.cbpp.org/research/federal-tax/house-health-bill-tax-cuts-for-wealthy-insurers-and-drug-companies-paid-for-by.
[2] John Holahan et al., “The Impact of the AHCA on Federal and State Medicaid Spending and Medicaid Coverage: An Update,” Urban Institute, June 16, 2017, http://www.urban.org/research/publication/impact-ahca-federal-and-state-medicaid-spending-and-medicaid-coverage-update.
[3] CBPP calculation for 2025 based on Urban Institute data and Tax Policy Center (TPC) tables T16-0295, and T16-0315.
[4] Matt Broaddus and Edwin Park, “House Republican Health Bill Would Effectively End ACA Medicaid Expansion,” Center on Budget and Policy Priorities, June 6, 2017, https://www.cbpp.org/research/health/house-republican-health-bill-would-effectively-end-aca-medicaid-expansion.
[5] Holahan et al., 2017.
[6] CBPP analysis based on JCX-27-17 cost estimates for 2017-2026. We estimate the cost of individual provisions through 2028 by assuming that the cost continues to change by the same amount as it does between 2025 and 2026. We assume that the “Cadillac tax” on high-cost health plans remains in place after 2026 as it would under the House bill. The estimate does not include the reported “reserve fund” from dropping the medical expense deduction threshold further from 7.5 percent to 5.8 percent, or proposed changes to coverage provisions (including the premium tax credit and the individual and employer mandates). Joint Committee on Taxation, “JCX-27-17: Estimated Revenue Effects Of The Tax Provisions Contained In Title II Of H.R. 1628, The ‘America Health Care Act Of 2017,’ As Passed By The House Of Representatives,” May 24, 2017, https://www.jct.gov/publications.html?func=startdown&id=5000.
[7] For more on the tax cuts in the House GOP health bill, see Huang and DeBot, 2017.
[8] TPC tables T16-0295 and T16-0315. The estimate includes the repeal of the following revenue-raising provisions as modeled by TPC: the 3.8 percent net investment income tax on unearned income, the 0.9 percent additional Hospital Insurance tax, the increase in the threshold for medical expense deductions, the “Cadillac tax” on high-cost health plans, and the excise taxes on insurers, pharmaceutical manufacturers and importers, and medical device manufacturers and importers. It does not include the proposed changes to coverage provisions (including the premium tax credit and the individual and employer mandates).
[9] CBPP estimate for the tax cuts from repeal of two Medicare taxes that only high-income households pay, based on Internal Revenue Service Statistics of Income data for 2014. For detailed methodology, see Brandon DeBot, Chye-Ching Huang, and Chuck Marr, “ACA Repeal Would Lavish Medicare Tax Cuts on 400 Highest-Income Households,” Center on Budget and Policy Priorities, January 12, 2017, http://bit.ly/2jzK2uI. We update the estimate in that paper to take into account the delay of the repeal of the 0.9 percent additional Medicare Hospital Insurance tax to 2023 in the final House bill, and the fact that the tax cuts would likely grow over time as incomes for those at the top increase (specifically, we assume that these tax cuts grow at the same rate as the overall revenue loss from repealing the Medicare taxes).
[10] Holahan et al., 2017.