Sizing up U.S. Sen. Ron Johnson’s claim on the GOP health care bill.
Two days before a showdown in the U.S. House of Representatives, with House Speaker Paul Ryan lobbying his colleagues hard to vote yes, a fellow Wisconsin Republican dumped on the GOP plan to replace Obamacare.
“I’ve got a lot of problems with the House bill as it’s written right now,” U.S. Sen. Ron Johnson said Tuesday at a Wis Politics event in Washington, D.C. — highlighting concerns over whether a top priority for Ryan and President Donald Trump can pass.
Afterward, Johnson complained to a reporter about what he sees as a paradox:
The replacement, he said, would reduce subsidies that help lower-income people buy health insurance, but also “expand the entitlement” by giving subsidies to higher-income people “that Obamacare never helped.”
Let’s see if Johnson’s right.
Note: We’re fact checking Johnson’s claim based on the original GOP legislation, not on any changes that might have been made after his statement.
Tax credits
Johnson’s claim alludes to what are known as refundable tax credits that help people who buy their own health insurance.
How they work: If a person has a federal tax bill of $2,500 U.S. Sen. Ron Johnson (R-Wis.) The statement The GOP’s Obamacare replacement would reduce subsidies that help lower-income people buy health insurance, but also “expand the entitlement” by giving subsidies to higher-income people “that Obamacare never helped.” The verdict GOP credits based on age rather than income and costs.
and receives a $1,000 tax credit, the tax bill is reduced to $1,500. A refundable tax credit means that if the amount of the tax credit is greater than the amount of taxes owed, the taxpayer receives a refund for the difference.
Both Obamacare and the GOP plan, referred to by Democrats as “Trumpcare,” offer the credits. But, as Johnson indicated, they take different approaches.
Obamacare: Tax credits are based on a person’s income and the cost of health insurance in the area where they live. The subsidies are available to people whose income is between 100% and 400% of the federal poverty level (in 2017, 400% is about $47,000 per year for an individual). The subsidies are larger for people with lower incomes and for those who live in areas where health care costs are higher.
GOP plan: The credits vary by age — people in their 20s would get $2,000 a year, with credits rising to $4,000 for people in their 60s. The eligibility extends to individuals who earn up to $75,000 a year — a significantly higher income than under Obamacare.
So, what’s the upshot?
The effect on people
An expert nonprofit organization in health care, the Kaiser Family Foundation, summarizes the differences this way:
Under the GOP plan, lower-income people generally will get reduced tax credits compared to Obamacare — especially those who are older and live in areas where health care costs more. Meanwhile, more people with higher incomes would become eligible for tax credits.
Here are the average tax credits for a 40-year-old, based on an annual income in 2020, according to Kaiser:
Income: $20,000. Obamacare tax credit: $4,143; GOP plan tax credit: $3,000
Income: $40,000. Obamacare tax credit: $1,021; GOP plan tax credit: $3,000
Income: $75,000: Obamacare tax credit: 0; GOP plan tax credit:
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$3,000
Income: $100,000: Obamacare tax credit: 0; GOP plan tax credit: $500
(In Milwaukee, the estimate is that the credit would be $1,280 with Obamacare and $3,000 with the GOP plan at the $40,000 income level.)
Our rating
Johnson says the GOP’s Obamacare replacement would reduce subsidies that help lowerincome people buy health insurance, but also “expand the entitlement” by giving subsidies to higher-income people “that Obamacare never helped.”
The Republican plan does offer subsidies, known as refundable tax credits, that are smaller for lower-income people than they are under Obamacare. And it does offer the credits to people with higher incomes than Obamacare does.
We rate Johnson’s statement True.