by Thomas B. Edsall · May 11, 2017
A couple waiting for an appointment at the Community Health Center of North Eastern Wetzel County in Burton, W.Va. Brendan Smialowski/Agence France-Presse — Getty Images
Well before the House voted last week to replace Obamacare with President Trump’s American Health Care Act, Senator Joe Manchin, a centrist Democrat from West Virginia who is up for re-election in 2018, met with the president. By his own account, Manchin told Trump:
Mr. President, 172,000 West Virginians got insurance for the first time. These are working people, but they’ve got something they never had before. They don’t know how they got it, they don’t know who gave it to them, they don’t know the Democrats, nothing about, “It’s Obamacare.” They don’t know any of that. All they know is they’ve got it. And you know what? They voted for you, Mr. President. The Democrats gave it to them but they voted for you. They’re going to know who took it away from them.
During the campaign, Trump appeared to fully grasp Manchin’s point.
Trump declared that “there will be no cuts to Social Security, Medicare & Medicaid” and added that “the middle class has to be protected.”
Safety net commitments were crucial to Trump’s appeal to white working-class voters, the constituency that put him over the top in the key states of Wisconsin, Michigan, Ohio and Pennsylvania. In Manchin’s West Virginia, Trump swept every county, carrying the state with 67.9 percent of the vote compared with Hillary Clinton’s 26.2.
Even after he won the presidency, Trump maintained his pro forma commitment to social insurance.
On April 24: If our health care plan is approved, you will see real health care and premiums will start tumbling down.
On May 1: It will be every bit as good on pre-existing conditions as Obamacare.
What in fact would the Trump-backed measure passed by the House last week actually do?
The bill cuts spending by Medicaid by more than $800 billion over ten years. This enormous cut endangers continued coverage for millions of struggling voters who cast ballots for Trump. The bill also includes starkly regressive tax provisions.
By 2022, when the provisions of the AHCA would be fully effective, those in the bottom two quintiles would pay higher taxes, up to $160 annually, according to the nonpartisan Tax Policy Center. Those in the middle of the income distribution would get an average annual tax cut of $240; those in the fourth quintile, a cut of $510; and those in the top 20 percent, an average tax cut of $2,830.
The distributional impact of the tax provisions is most apparent in the highest income brackets: those in the top one percent, whose household income is more than $770,000, would get an average tax cut of $37,220. Those in the top 0.1 percent, who make $4 million or more, would get an average reduction of $207,240.
According to the nonpartisan Center on Budget and Policy Priorities, at the highest point of all, the 400 households with annual incomes exceeding $300 million apiece, the tax cut would be worth an estimated $7 million.
The tax cuts are financed, in turn, by the multibillion dollar reduction in Medicaid spending noted above.
According to the Kaiser Family Foundation,
the proposed changes to Medicaid under AHCA would disproportionately affect low-income individuals and people of color for whom the program is a central source of coverage. Medicaid covers over half of all poor families, one in five adults of color, and over half of children of color.
Medicaid itself reports that nearly two out of every three adult women enrolled in Medicaid are in their reproductive years, and that Medicaid currently finances about 45 percent of all births in the United States.
It has sometimes been overlooked that whites make up a solid plurality, 41 percent, of Medicaid recipients; 22 percent of recipients are African-American and 25 percent Hispanic. In the four pivotal 2016 states that supported Trump I referred to earlier, whites are the majority of recipients, ranging from 58 to 67 percent.
Judith Solomon, vice president for health policy at the Center on Budget and Policy Priorities, described some of the AHCA changes in Medicaid in an email.
Beginning in 2020, Solomon wrote,
states can freeze enrollment and only cover the “grandfathered” enrollees who were enrolled on 12/31/19. The block grant option allows states to cut eligibility. The only requirement would be to cover pregnant women and children under age 6 with incomes under 138% of the poverty line, and children 6 to 18 below the poverty line.
Along similar lines, Matthew Fiedler, a Brookings fellow, wrote me:
The two most important Medicaid provisions under the AHCA are: (1) cutting federal funding for covering the ACA Medicaid expansion population; and (2) implementing a “per capita cap” that would limit the total amount of federal funding states could receive per person they enroll. Both provisions would give states very strong incentives to curtail eligibility, but neither would directly require states to do so.
Those placed at highest risk under these provisions, according to Fiedler, are “non-elderly adults with incomes below 138 percent of the poverty, particularly those without kids.” Many of these “childless adults” — adults without dependent children — are not actually childless but aging parents whose children are grown and do not live at home.
Just as the tax changes in the Republican bill flow to the rich, so do the health care benefits.
Howard Gleckman, a senior fellow at the Tax Policy Center, found that cuts in Medicaid and new health care tax subsidies would have upwardly redistributive consequences:
Those making less than $10,000-a-year would lose an average of about $1,400, or nearly one-third of their income — under the AHCA relative to the ACA. Middle-income households, those making $50,000 to $75,000, would see little change — an average increase in net government transfers of about $60. However, those making $200,000 or more would receive an average net increase in government support of $5,640, or 1.1 percent of their income.
Gleckman explained that the
decline in well-being for low-income people would result from the AHCA’s proposals to cut the federal contribution to Medicaid and its move to eliminate cost-sharing subsidies for lower-income households that buy non-group insurance, thus raising their deductibles and co-pays.
In March, the Congressional Budget Office evaluated an earlier version of the legislation and estimated that 24 million people would lose coverage by 2026. Most experts believe that if something like the House bill becomes law, more than 10 million people, and quite possibly many more, will lose coverage.
The provisions of the House bill for those with pre-existing conditions are deliberately ambiguous. Will Doran, reporting for Politifact.com, noted that while insurers would “have to provide access to coverage for people with pre-existing conditions,” the measure “says nothing about the rates of that coverage.” As a result, the law would
allow for people with pre-existing conditions to be charged more per year for their insurance coverage — possibly to the tune of thousands or even tens of thousands of dollars more per year.
The American Medical Association opposes the legislation, contending that it would
result in millions of Americans losing their health care coverage and could make coverage unaffordable for people with pre-existing conditions.
From another vantage point, one with political significance, maps created by the Kaiser Family Foundation show how individuals of different ages and incomes would fare if the AHCA replaces Obamacare.
The affluent come out ahead. Older voters with modest incomes — a core element of Trump’s support — would be penalized, paying more for health coverage in almost every section of the country.
The accompanying Kaiser map shows the sections of the country where a 60-year-old making $30,000-a-year would pay more (in orange) or less (in blue) in 2020. The only places where such an individual would pay less are in New York and Massachusetts.