By Mary Johnson, editor
Time to hit the brakes on an Obamacare repeal. Low-income and middle-income seniors and their families could wind up paying for a massive windfall that would go to a handful of the nation’s wealthiest households.
In the February newsletter I reported that a complete repeal of the 2010 Affordable Care Act (better known as Obamacare) would increase Medicare premiums and out-of-pocket costs, while ending some benefits, for more than 57 million Medicare beneficiaries. Now a new report from the Center on Budget and Policy Priorities estimates that a repeal would give 400 of the highest-income households in the U.S. — whose annual incomes average more than $300 million apiece — an average annual tax break of about $7 million each.
A repeal of the Affordable Care Act would end two Medicare taxes that fall on the wealthiest taxpayers in the country but don’t affect middle- or lower-income people. One is a 0.9% Medicare payroll tax on working individuals with incomes over $200,000 and couples with incomes above $250,000. The other is a 3.8% tax on investment and other unearned income. Repealing the two tax provisions would result in a $2.8 billion a year loss in tax revenue to Medicare, accelerating Medicare’s insolvency.
Before the Affordable Care Act was signed into law in 2010, the Medicare Trustees estimated that the Medicare Part A hospital insurance trust fund would become insolvent by 2017. In 2016 Medicare said that, assuming current law provisions remained unchanged, the Medicare Part A Trust Fund would remain solvent until 2028 — more than ten years from now.
Higher Medicare costs are something few older Americans can afford. In our 2016 Senior Survey, 45% of those participating said they already spend more than one-third of their Social Security benefits on healthcare costs. Of those, fully 18% said they spend more than 50% of their Social Security on healthcare.
Congress would better serve us all by focusing on reducing the growth in healthcare costs, rather than simply shifting a greater share of the costs to beneficiaries.