The basic problem is looking at one side of an issue and ignoring the consequences. If you use the affordable Care Act it’s time to pay attention.
Sep 11, 2024
When asked in the debate whether he had a replacement plan for the Affordable Care Act, former President Donald Trump said he had the “concepts of a plan.”
If you look at Trump’s record as president, there is truth in that statement. He did, in fact, propose the concept of an ACA replacement plan in his 2020 budget, though it has never gotten much attention.
Trump’s conceptual ACA replacement plan would have repealed the ACA’s premium subsidies and Medicaid expansion, replacing them with a block grant to states. It also would have capped federal Medicaid spending. All told, Trump’s plan would have reduced federal spending on the ACA and Medicaid by over $1 trillion over a decade.
Trump also proposed providing “relief” from the ACA’s “insurance rules and pricing restrictions.”
Trump has long talked about making the ACA less expensive, but the question is less expensive for whom. Trump’s past proposals would certainly have made the ACA less expensive for the federal government, but with the trade-off of higher out-of-pocket premiums for people, more uninsured, and higher spending and greater risk for states.
Source: Kaiser Family Foundation
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In terms of “replacing” ACA, the better option is simply to have the Trump administration leverage existing provisions in PPACA that would allow state by state experimentation – which would substantially reduce the federal taxpayer subsidies. Each state, to the extent they wanted, could step in and contribute more – as desired.
The better design is to have individuals fund/buy insurance for the first dollar stuff (where they could buy in individual market or through employers), and have a federal reinsurance above a modest individual attachment point, say $25,000.
That is, each of us should be responsible for the everyday, and a modest amount of expense (directly or via employment), where once you get to a significant amount of cost in any one year (with carryover), that should be/can only be reasonably funded by the larger society.
Asking individuals or employers to shoulder an unlimited amount of spend (no annual and no lifetime maximum) is stupid – shifting costs beyond what individuals or employers can reasonably cover, raising the cost of coverage to the point where it is all but unaffordable for many employers (regardless of size).
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This is why we have a Congress, to evaluate and vote these ideas up or down. Just because a candidate says I’ll do this or that doesn’t mean it will happen. Just like when Harris claims she’s going to stop price gouging and lower taxes for millions. Since the bottom half of taxpayers are already exempt from taxes or paying such a small amount, is she going to lower taxes on those who do pay significant amounts? Is any of this just electioneering or do you think it is real?
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By expanding various credits, VP Harris seeks to lower taxes by making the credits “refundable” – that is essentially a negative income tax concept, to buy votes by sending checks to those who do not owe any taxes. They have already passed such legislation affecting 401k, 403b and IRAs – the savers credit will become “refundable” in 2027 – those who save will get a tax deduction, as appropriate, AND a federal taxpayer subsidy credited to their 401k, 403b and/or IRA.
The retirement saver’s credit currently allows eligible workers to claim a tax credit in exchange for retirement account contributions. The credit is available to employees earning below a certain threshold and is generally equal to 10% to 50% of your retirement account contributions, up to $2,000. The credit is also subject to a phase-out based on income.
The SECURE 2.0 Act replaces the saver’s credit with the saver’s match beginning in 2027. Instead of a tax credit on your annual return, the saver’s match will deposit funds into a qualifying IRA or retirement plan for eligible savers.
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