Last Call To Replace "Repeal And Replace"

If you're wondering where this month's Senate GOP's plan to replace Obamacare went, and why nobody is talking about it on the conservative side, it's because it took all of a couple days to figure out Senate Republicans were about to hit tens of millions of middle-class Americans with a substantial tax increase to pay for their overpriced high-risk pool scheme.

The apparent change centers on the plan's tax treatment of health insurance. Right now, health insurance contributions by employees and their employers are not taxed; the GOP wanted to include a cap on how much of those contributions can remain untaxed. 

But the devil is in the details. The original eight-page proposal released by the Senate Republicans -- Richard Burr of North Carolina, Tom Coburn of Oklahoma, and Orrin Hatch of Utah -- said that the new cap would be "65 percent of an average plan's costs." Health policy experts told TPM that this would likely result in a big tax increase on most Americans and some would probably lose their insurance. 

"It's obviously a substantial increase on people who get employer-sponsored insurance," Gary Claxton, vice president at the non-partisan Kaiser Family Foundation, told TPM of the original proposal. "This would be a meaningful hit on people. It's a big radical change. This is not an incremental thing, and it affects most people under 65." 

The Congressional Budget Office recently analyzed a similar, though not identical, proposal and estimated that it would raise $613 billion in revenue over nine years, while six million people would lose their employer coverage in the five years after it took effect. 

The initial reporting on the GOP's new proposal, by the Washington Post and National Journalas well as TPM, highlighted that the plan would likely lead to many Americans paying more for their insurance. National Journal observed that, under the GOP's plan as originally proposed, if you had an average health plan, you'd pay taxes on 35 percent of its costs.

So, say you earn $60,000 a year and have an employer-sponsored health plan for your family of four.  Let's say that plan is worth $10,000.  Under the GOP plan, you're responsible for taxes on 35% of that plan as additional income, and the marginal federal tax rate at $60k is 25%.  So 25% of $3,500 is an extra $875 in federal taxes you pay.  Gosh, that seems so much better than Obamacare, right?

No wonder they're scrambling to "fix" their plan:



So they're only going to tax the highest earners with the "most generous" insurance plans?  Oh, I'm sure THAT will go over well with the one percenters.