The Republican Obamacare Alternative Raises Taxes on 150 Million Americans

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Senate Republicans unveiled their big Obamacare alternative plan today, and besides taking healthcare away from 10 million Americans, it also raises taxes on the 150 million people who get health insurance from their employer.

In order to force employees to pick cheaper healthcare insurance plans, because the Republican plan doesn’t lower healthcare costs any other way, the proposal would cap the amount employers get to deduct from the cost of an employees health insurance at 65% of the average cost.

According to Title 6 of the plan,

But imposing taxes and mandates on individuals and businesses to pay for an unaffordable, massive new government entitlement is also unfair. Obamacare included more than a dozen new taxes, including taxes on pharmaceutical drugs and medical devices. We repeal those taxes which non-partisan experts agree will increase the cost of health coverage.

To help lower the cost of health coverage, our proposal takes a measured step to reduce a distortion in the tax code—the unlimited exclusion from a worker’s taxes of employer-provided health coverage. This step is necessary and important, because economists across the political spectrum largely agree that the current distortion in the tax code helps to artificially inflate the growth in health care costs.

Therefore, our proposal caps the tax exclusion for employee’s health coverage at 65 percent of an average plan’s costs. The value of employer-sponsored health insurance would be capped and indexed to grow at an annual rate of CPI +1. This approach is certainly fairer than Obamacare, and it provides for more equitable tax treatment of health insurance, whether an individual is self-employed or works for a Fortune 500 business.

This means that everyone who gets their health insurance from their employer would have to pay a 35% tax on their plan. Currently, employers are able to deduct 100% of the cost of the plan, so the tax is zero. If a worker chooses a plan that is more expensive than the average, they would pay an even higher tax rate.

The party of no tax increases has just proposed a healthcare plan that is a defacto tax increase on 150 million Americans. The tax increase comes on top the fact that at least 9.3 million people would lose their health insurance. Even worse, the Republican plan repeals the ACA’s ban on denying coverage due to preexisting conditions. If the Hatch/Burr/Coburn were to become law millions more Americans who have preexisting conditions would either be thrown off of their insurance, or see their rates skyrocket.

The Republican plan isn’t an alternative to the ACA. It’s let’s repeal Obamacare, and go back to the way things used to be. Republicans are going to try to dress this disaster up as liberty and freedom, but the truth is that this is Mitt Romney’s healthcare plan, which was John McCain’s 2008 healthcare plan.

Republicans didn’t propose an alternative to the ACA today. This smoke and mirrors show was designed to hide the fact that the GOP has nothing.

Obamacare is looking better by the minute as the Republican alternative is to throw tens of millions off their health insurance, and raise taxes on 150 million other Americans.

The Republican Obamacare alternative is a political disaster that is set to blow up in their faces. It’s easy to see now why Republicans were so afraid to tell their country what their alternative to Obamacare would be. The Republican alternative is nothing.

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Jason Easley

Jason is the managing editor. He is also a White House Press Pool and a Congressional correspondent for PoliticusUSA. Jason has a Bachelor’s Degree in Political Science. His graduate work focused on public policy, with a specialization in social reform movements.

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Member of the Society of Professional Journalists and The American Political Science Association

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