As part of President Trump’s plans for repeal and replacement of the Affordable Care Act, one element that remains in the forefront is that of proposed tax credits (PTCs) for Americans. Are they all that they seem to be? A recent Kaiser Family Foundation study doesn’t seem to think so.
In one of their latest studies, the KFF found that PTCs under the proposed replacement plan would be 36% less than they currently are by 2020, with a longer lead time for credit increases. The study also finds that the credits vary greatly by age and income level with the replacement plan placing more favorable treatment as compared to the ACA to younger and upper middle income individuals.
The study further shows that while the ACA’s use of PTCs was designed to alleviate higher premium costs based on age and geographic location for those with insufficient income by establishing an “affordability” metric as 9.5% of the person’s household income. In contrast, the proposed plan’s does not directly tie to the premium cost in relation to the person’s income.
Instead, the proposed plan contemplates that almost anyone would be qualified to receive PTCs, even those who could possibly afford healthcare without them and fall above 400% of the poverty line (the limit set by the ACA for maximum PTC eligibility). Moreover, the proposed plan does not take into consideration the variation of premium costs based on geographic location, whereby rural areas tend to have higher premium costs.
It’s certainly an indicator that while President Trump aims to provide his own take on affordable healthcare, Trump has not considered that the proposed plan may result in losses in the number of insured as compared to the ACA.
To read the full study, click here.
