How Obamacare tax credits compare to Trumpcare
The leaked draft of the GOP Obamacare repeal and replacement plan would swap out the law's income-based premium subsidies with tax credits that vary by age. They'd start at $2,000 a year for young adults under age 30, increasing for different age groups. The maximum would be $4,000 a year for people age 60 and older.
We were curious how that would change the amount of federal assistance different people would receive, so we used the Kaiser Family Foundation's subsidy calculator to compare the two. Here's what we found.
Data: GOP draft bill, Kaiser Family Foundation ACA premium calculator, Department of Health & Human Services; Methodology: Income ranges based on percent of federal poverty level. 150% = $18,090, 250% = $30,150, 500% = $60,300. Columbus area code: 43201, Prescott: 86301, Tampa: 33601; Chart: Andrew Witherspoon / Axios
Here are a few things we noticed (which line up with what we said last month in our story about winners and losers):
- Younger, wealthier people fare better under the tax credit system. That's partially because Obamacare subsidies phase out at 400 percent of the federal poverty level, which means people who make more than that get no federal assistance. Tax credits would be given to everyone on the individual market, regardless of income.
- Older, poorer people would pay more — sometimes a lot more — under the GOP plan. While older people can currently pay three times as much as young people in premiums, the tax credit only doubles between the highest and lowest age brackets.
- There's huge local market variation here. For example, premiums — and therefore subsidies — in Prescott, Arizona are much higher than the other two marketplaces we chose. (Arizona was the state with the 116 percent increase in Obamacare premiums — by far the highest in the nation — because insurers got too many sick customers and had underpriced their premiums for years.)
Yes, but: Keep in mind that the leaked draft is more than two weeks old by now, so we don't know if the amount of the credits reflect the GOP's current thinking. But they have been talking about age-based credits for a long time, so it's safe to say that some version of this will end up in the repeal and replacement plan.
Corrects second sentence to clarify that the GOP tax credits are annual amounts.