By using this site, you agree to the Privacy Policy and Terms of Use.
Accept
Health Works CollectiveHealth Works CollectiveHealth Works Collective
  • Health
    • Mental Health
  • Policy and Law
    • Global Healthcare
    • Medical Ethics
  • Medical Innovations
  • News
  • Wellness
  • Tech
Search
© 2023 HealthWorks Collective. All Rights Reserved.
Reading: The GOP Strategy for Increasing Purchasing Power: Subsidies in Reverse
Share
Notification Show More
Font ResizerAa
Health Works CollectiveHealth Works Collective
Font ResizerAa
Search
Follow US
  • About
  • Contact
  • Privacy
© 2023 HealthWorks Collective. All Rights Reserved.
Health Works Collective > Policy & Law > Health Reform > The GOP Strategy for Increasing Purchasing Power: Subsidies in Reverse
BusinessHealth ReformPolicy & Law

The GOP Strategy for Increasing Purchasing Power: Subsidies in Reverse

Brad Wright
Brad Wright
Share
7 Min Read
GOP health replacement
SHARE

In this section of the GOP’s ACA replacement proposal, they state that they “would provide a targeted tax credit to certain individuals that could solely be used for the purpose of helping to buy health care.” This credit would be available to any employee of a small business, which the proposal defines as an entity with 100 or fewer employees. According to the latest data from the U.S. Census Bureau, that would mean that the employees of more than 98% of businesses in the U.S. would qualify.

In this section of the GOP’s ACA replacement proposal, they state that they “would provide a targeted tax credit to certain individuals that could solely be used for the purpose of helping to buy health care.” This credit would be available to any employee of a small business, which the proposal defines as an entity with 100 or fewer employees. According to the latest data from the U.S. Census Bureau, that would mean that the employees of more than 98% of businesses in the U.S. would qualify. The credit would also be available to anyone else that either doesn’t work for a small business or works for a large business that doesn’t offer health insurance coverage (looks like the employer mandate is going away).

GOP health replacementThe plan offers the following additional detail: “Individuals with annual income up to 300 percent of the Federal Poverty Level (FPL) ($35,010 in 2014) would be eligible to receive an age-adjusted, advanceable, refundable tax credit to buy health coverage or health care services.” So, let me get this straight: They’re saying that if you’re income is at or below 300% of poverty, they’ll give you a refundable tax credit up front to help you pay for health insurance. Let’s take a moment to compare that to the current system of subsidized premiums through the health insurance exchange that exists because of the ACA. Both the tax credit and the subsidy happen on the front end, so there’s no difference there. Honestly, the only difference between a refundable tax credit and a subsidy is that the tax credit let’s you keep a portion of the tax money you owe in your pocket, while the subsidy collects your taxes and then gives a portion of them back to you. The math is exactly the same. It is literally six of one, half a dozen of another. But, because of how people’s minds work, they are much more likely to approve of a tax credit (they get to avoid paying some taxes) than a subsidy (they pay all their taxes and get a government handout). So, I’m not opposed to the idea of offering assistance as a tax credit rather than a subsidy. However, this portion of the proposal doesn’t stop there.

First, it should be noted that the proposal subtly dials back the level of federal support for making health insurance affordable. Under the ACA, subsidies for the purchase of health insurance don’t phase out until 400% of poverty. As just referenced above, the GOP proposal lowers this to 300% of poverty. So, if you’re a person making between $35,010 and $47,080 a year, the GOP is proposing to withdraw the financial assistance you may currently enjoy when purchasing coverage. For a family of 4, the household income range that stands to lose financial assistance is between $72,750 and $97,000.

More Read

Observations on the PSA Testing Debate
Why Hospitals Need A Performance Program Officer
Oh No! The Republicans Are Going to Tax Your Health Benefits!
UnitedHealth, YMCA Expand Diabetes Prevention Program with P4P for Walgreens
Headlines I Wish I Hadn’t Seen

Second, the plan does its best to appeal to those invincible people that are outraged at being forced to buy a product they think they don’t–and won’t ever–need. And they sell this under the guise of freedom: “Our proposal would give individuals the freedom to choose the health plan that best meets their individual health care needs.” Translation: If you’re young, healthy, or otherwise not expecting to utilize healthcare, you’re free to buy some really inexpensive coverage that resembles health insurance in name only. This is another one of those things that will appeal to people without much foresight, and that’s the sandbox that politicians like to play in–after all, the longest election cycle is for Senators and that’s just 6 years. Why plan for the long term?

Third, the proposal would eliminate the employer mandate (I’ll talk more about that later), while giving individuals tax credits to purchase coverage. As any health economist will tell you, that will result in what is called “crowd out.” Essentially, employers will decide that they’d rather not pay for their employees to have health insurance, especially when they realize that their employees can get tax credits to buy their own insurance. The end result is that we’ll be shifting the cost of subsidizing health insurance from corporate payrolls to the government. This would suggest that the proposal is more concerned with giving breaks to big business than about controlling government spending. Or perhaps this is just phase one of a two part austerity plan.

Finally, the proposal tries to sneak in the creation of big government bureaucracy towards the end of the section. “Our proposal envisions a health financing office at the U.S. Department of Treasury charged with ensuring that the health tax credits are administered in a manner that is secure, responsible, and safe.” Well, if all the rest of what is being proposed were to actually happen, then I completely agree that there needs to be an administrative agency in charge of, well, administering the program. But this makes my head hurt merely because it is coming from the same group of people who cooked up the false story that enforcing the tax penalty under the ACA was going to result in the hiring of 15,000 new IRS agents. Suddenly now actually stating that you intend to expand government is all a part of the plan?

GOP’s plan / shutterstock

Share This Article
Facebook Copy Link Print
Share

Stay Connected

1.5kFollowersLike
4.5kFollowersFollow
2.8kFollowersPin
136kSubscribersSubscribe

Latest News

a woman walking on the hallway
6 Easy Healthcare Ways to Sit Less and Move More Every Day
Health
September 9, 2025
Clinical Expertise
Healthcare at a Crossroads: Why Leadership Matters More Than Ever
Global Healthcare
September 9, 2025
travel nurse in north carolina
Balancing Speed and Scope: Choosing the Nursing Degree That Fits Your Goals
Nursing
September 1, 2025
intimacy
How to Keep Intimacy Comfortable as You Age
Relationship and Lifestyle Senior Care
September 1, 2025

You Might also Like

What If We Paid for Patient Recovery?

November 6, 2014
Health Reform

Primary Care Reimbursement

September 9, 2011
Health Reform

Direct Primary Care – Isn’t It Too Expensive?

December 15, 2015

Does Your Smartphone Know More About Your Health Than You Do?

April 3, 2012
Subscribe
Subscribe to our newsletter to get our newest articles instantly!
Follow US
© 2008-2025 HealthWorks Collective. All Rights Reserved.
  • About
  • Contact
  • Privacy
Welcome Back!

Sign in to your account

Username or Email Address
Password

Lost your password?