Former President Barack Obama has maintained a low profile since leaving the White House, but recently he took to Facebook to blast a Senate health care bill that threatens to dismantle much of the Affordable Care Act, his signature legislative achievement.
The Senate bill "hands enormous tax cuts to the rich and to the drug and insurance industries, paid for by cutting health care for everybody else," Obama wrote in a Facebook post.
We decided to look into the former president’s claim about the budgetary effects of the Senate Republican plan that repeals or reworks much of the ACA, also known as Obamacare.
Obama is right that the Senate bill contains a tax cut for wealthy Americans and medical-related businesses.
The Congressional Budget Office has yet to put a number on the Senate bill’s tax cut. But the amount will likely be in the same ballpark as its scoring of the House bill, which cut taxes by about $1 trillion over 10 years, with high-income households and the health care industry gaining most of those benefits, according to the Tax Policy Center.
The Senate bill repeals Affordable Care Act taxes that levy a 3.8 percent fee on investment income, as well as a tax on individuals making $200,000 or more ($250,000 for couples).
The bill also eliminates ACA taxes that target health insurers, and makers of prescription drugs and medical devices.
We should also note that middle- and lower-income consumers would likely see benefits from tax cuts in the form of lower prices and reduced fees on health savings accounts, as we pointed out in an earlier check of a House version of the bill.
Obama is correct that tax cuts would be offset by cutting spending on health care.
But it’s a stretch to say everybody’s health care would suffer, when what’s on the chopping block is federal funding for lower-income Americans.
In the individual market, the Senate bill changes the formula for calculating how much help the federal government gives lower-income Americans to buy insurance.
Compared with the Obamacare formula, the Senate GOP version would amount to a 15 percent across-the-board cut in premium subsidies, and result in low-income people paying higher premiums for bigger deductibles, according to Larry Levitt, senior vice president of the Kaiser Family Foundation, a nonpartisan health care think tank.
Starting in 2020, the Senate bill also repeals Obamacare’s cost-sharing subsidies that help lower-income Americans defray the cost of deductibles and out-of-pocket expenses.
But the biggest cut in federal spending comes out of Medicaid, by changing the share carried by the federal government, relative to states.
The Senate bill converts federal Medicaid funding to a per capita cap starting in 2020, placing a ceiling on the amount of funding a state gets per enrollee. Alternatively, states could opt for a block grant, a fixed amount of federal funds. Under either approach, the federal government would provide less to states than under Obamacare.
Separately, starting in 2021, the Senate bill begins a three-year phase out of enhanced funding given to the 31 states (plus Washington, D.C.) that expanded Medicaid under Obamacare. As we noted in a previous check of the House bill, reducing this funding would likely cause states to end expansion.
This graphic from the liberal Center on Budget and Policy Priorities is a side-by-side illustration of Obama’s claim that Republicans are rewarding wealthy Americans through a health care cut.
The yellow bar shows $33 billion going to the top 400 highest-income households as a result of repealing the Obamacare tax cuts.
The red bar shows how removing $33 billion in revenue translates to cutting off funding for Medicaid expansion population of four states―Alaska, Arkansas, West Virginia and Nevada. (Note: This graphic is based on the CBO’s earlier score of the House version, which will likely differ from its score of the Senate).
Obama said that the Senate bill "hands enormous tax cuts to the rich and to the drug and insurance industries, paid for by cutting health care for everybody else."
The Senate bill does give a tax cut to wealthy Americans and medical-related industry. Assuming a budget analysis of the Senate bill is similar to that of the House version, the tax cut will be to the tune of $1 trillion.
It’s a bit hyperbolic to say everybody’s health care would be cut to finance the tax cut; it’s mostly lower-income people who lose out as a direct result of the bill. He’s right that the Senate bill would deliver a tax cut as it reduces the amount of federal funding lower-income Americans would get to help buy insurance. The bill would also repeal funding to defray deductibles and out-of-pocket costs for those eligible. It also lessens the share of Medicaid funding carried by the federal government, relative to states.
We rate Obama’s statement Mostly True.