Tax Deduction
In his proposals, Trump would replace the ACA with a tax deduction letting people with health plans fully deduct their insurance premiums from their taxes. He would move to a system of Medicaid block grants, which would cut costs because the federal government would provide states with a limited, fixed amount of money. And he wants to allow insurance to be sold across state lines.
The deduction for insurance premiums would add about $8 billion in costs to the ACA repeal, increasing the federal deficit by an estimated $41 billion, while reducing the number of individuals losing coverage to 15.6 million, the Rand study found. The deduction would lead to lower health costs for higher-income people, who benefit more from reduced taxes, the researchers said.
“Distributionally, it benefits higher income people more than lower income people,’’ Collins said.
Four Proposals
From Clinton’s side, the researchers looked at four proposals, all of which would increase coverage and lower costs for individuals. Three of the proposals would add to the deficit, and one would cut it modestly.
The biggest proposal, according to the study, is a refundable tax credit of as much as $2,500 for individuals and $5,000 for families whose health-care costs exceed 5 percent of income. She also wants to fix what’s called the family coverage glitch, which prevents some low-income families from getting financial assistance.
But the proposal that’s attracted the most attention recently -- a government-run public option health plan to compete with private carriers on the ACA’s exchanges -- has some of the smallest effects. It would provide insurance to 400,000 additional people, while cutting the deficit by $700 million. The Rand analysis assumes the plan would pay providers Medicare rates, which are typically lower than those paid by commercial insurers, helping account for its lower cost.
This article was provided by Bloomberg News.