The Republican bill to undo the Affordable Care Act, also known as Obamacare, would bring down taxes for the very rich while eliminating thousands of dollars in benefits for the typical poor or middle-class household,Â a newÂ analysis shows.
The typical household with more than $200,000 a year in income would pay $5,500 less annually in taxes under the recent plan put forward by GOP senators. By contrast, households earning less than $10,000 a year would lose out on an average of about $2,600 in federal benefits annually, according to the analysis published Tuesday by the nonpartisanÂ UrbanÂ Institute and Brookings Institution.
TheÂ Republican bill would water down or eliminate important provisions of Obamacare, although the GOP plan would retain the overall structure of President Barack Obama’s health-care overhaul.
The bill’s current version â the basis for the new analysis â would get rid of taxes thatÂ Democrats under Obama laid on the rich to pay for the overhaul and reduce the subsidies designed to help consumers in the middle classÂ buy private insurance. Republicans, however, are reportedly considering revisions to the bill that would keep some of the taxes in place, which would limit the savingsÂ for the wealthy.
At the same time, the bill would sharply limit spending on Medicaid, the federal program that provides insurance to poor Americans along with roughly half of pregnant women and nearly two-thirdsÂ of nursing-home residents.
The figures do not necessarily representÂ changes in how much households would pay,Â because they account for taxes and benefits but not changes in the cost of premiums. Republicans have argued that by deregulating the insurance sector, their bill would make insurance less expensiveÂ â so householdsÂ receiving less financial help to buy insurance under the GOP plan could still save money on premiums.
The analysis also only describes how much federal health-care benefits cost, not how much they are worth to the people who receive them. For instance, the GOP bill could result in steeper out-of-pocket deductibles andÂ co-payments for many households. As a result,Â some consumers might feel like the plans on offerÂ â and the federalÂ benefits they are using to buy them â are essentially worthless.
Similarly,Â Republicans have argued that Medicaid can be run much more efficiently and cheaply, so reductionsÂ in outlays for the program willÂ have a limited effect onÂ whetherÂ beneficiaries can see their doctors.
Because of the retrenchments in Medicaid, the bill would impose the steepest reductions in benefits on the very poor. This isÂ one of the most important differences between the Senate’s version of the bill and the version passed by the House, the analysis by Urban and Brookings suggests.
The groups’ previous report on the House’s version also projected substantial losses of benefits for theÂ poor, but the reductions in the Senate’s bill are nearly twice what the House approved.Â Under the Senate’s bill, net benefits would decline by $2,500 a yearÂ â or 69 percent of average incomes â among households making less than halfÂ the federal poverty level.
The effects on specific households could vary, however.
The sick who rely regularly on Medicaid could be much worse off. On the other hand, in states that have not made Medicaid more generous under Obamacare, the GOP bill could allow someÂ poor households that are not eligible for the program to receive subsidies for buying private insuranceÂ on the exchangesÂ set up under Obamacare.
Those subsidies would become less generous for many in the lower middle class, while for the upper middle class as a whole, theÂ bill would be a wash.Â Households in this group tend toÂ receive less-generous benefits under Obamacare anyway, and some would benefit from reduced taxes.
Again, though, theÂ effects on individual households could be very different, depending on whether they currently benefit from Obamacare and how their premiums change.
As an example, the GOP bill wouldÂ give insurers more freedom to charge older customers more. Because the upper middle class receives little in theÂ way of federal subsidies for private insurance, older consumers in this group could wind up paying much more out of pocket.
The Congressional Budget Office issued projections forÂ a typical 64-year-old buying insurance individually with $57,000 a year in income. That consumer could expect to pay $6,800 annually for a âsilverâ plan under Obamacare, after accounting forÂ the subsidies, but wouldÂ have to pay $20,500 a year for the same plan under the GOP bill.
Bringing down these costs for olderÂ consumers, or offering more generousÂ benefits for the poor,Â could be costly, said Linda Blumberg, an economist at the Urban Institute and one of the authors of the report. She and her colleagues have arguedÂ forÂ controlling costs by capping what doctors and hospitals can charge in places whereÂ patients have few options,Â guaranteeing assistance forÂ deductibles and copays, and offering reinsurance for insurers with costly patients.
Those provisions might not be excessively expensive, and similar ideas have garnered bipartisan support in the past, Blumberg said. âThereâs plenty there that the two sides should be able to agree on,â she said. âIâm not saying that they will.âÂ