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02/24/17

Look What We Found

We are in a series looking at the recently published Republican plan for the ‘repeal and replace’ of the Affordable Care Act. Click here to find other posts in the series.

So, this tax credit thing…

Republicans have been consulting with think tanks and policy types for several years now, looking for the right conservative idea to replace ObamaCare.  It turns out they found what they were looking for, not from some K Street lobbyist, but in the box of W’s old stuff up in the attic.

It turns out that President Bush, the latter, took a little run at some healthcare reform back in 2002.  No one seems to have noticed, maybe because in 2002 we were still reeling and focused on foreign terror threats, but tucked in a trade bill was the Health Coverage Tax Credit (HCTC).  This credit on the personal tax bill was designed to cover 65% of the premium for certain qualified health plans for certain eligible taxpayers and their families.  Particularly, it applied to those who purchased coverage through state-based ‘high risk pools’ (insurance for sick people) that could not deny coverage due to pre-existing conditions.  Technically, the law is still on the books until it sunsets at the beginning of 2020, but it has kind of been lost in the ACA wash.

This is getting dusted off, shined up, and moved front and center in the new plan. OK, to be fair, it has been central to the conservative alternative for the past eight years, but the inevitable veto meant that no one cared what they proposed.   The guy with the veto pen is gone, so we care now.  What’s the deal?  In short…

If you don’t get coverage somewhere else (your employer or the government), you get this tax credit to help you pay for your insurance.

It is not adjusted for income, but uses age as a proxy for health (we all are testimonies to this truth), the credit goes up as you get older. (Yep, this point will lead to a major political fight.)

It is ‘advancable,’ meaning you get it ahead of your tax return since many people can’t wait for the tax return if they are going to be able to pay their premium.

It is ‘refundable,’ which means that if the credit exceeds your tax liability, you can get a tax refund.  This will negatively affect the eventual CBO economic scoring, but makes this more valuable to low income Americans who need help the most.

It’s portable, which means you can take it with you (finally, an obvious one).

If you qualify for the tax credit, you can use it to buy any eligible plan sold on the individual market in your state, including the old catastrophic plans.  That means you can get plans that cost less than what you’d get for selling a kidney, which, you know, you really only want to do one time.

To sum up, if you need to buy individual coverage, you’ll get a tax credit that goes up as you get older to help you buy whatever product you want to buy.

Yep, there are lots of details left to explain and even more yet to be fleshed out, but I am already way past my capability explaining anything with the word ‘tax’ in the title. Next week, we’ll move on to the other elements of the plan.

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ALN

Tim Coan, ALN’s CEO, writes an insightful and witty blog three times a week about a variety of topics relevant to independent physician practices.

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