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VOL. 41 | NO. 27 | Friday, July 7, 2017

New study: GOP health bill cuts benefits for poor, taxes for rich

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WASHINGTON (AP) — America's poorest families would lose thousands of dollars in health benefits so that millionaires could get huge tax cuts under the Senate Republicans' health bill, according to an independent analysis released Tuesday.

The study underscores the political difficulty of repealing and replacing Democrat Barack Obama's health care law, which raised taxes on the rich while increasing health benefits for low- and middle-income families.

Families making less than $10,000 would lose, on average, more than $2,500 in annual benefits under the bill, once it is fully phased in. Families making more than $1 million a year would get tax cuts averaging about $50,000, according to the analysis by two nonpartisan research groups, the Health Policy Center and the Tax Policy Center.

Middle-income families — those making between $50,000 and $75,000 a year — would lose an average of $150 when the tax cuts and benefit cuts are combined.

The bill represents a huge shift in wealth from the poorest to the richest Americans, one reason it is drawing opposition from some moderate Republicans. Some conservatives think the bill is too generous to the poor, creating a stalemate that has Republican Senate leaders scrambling to find a compromise.

"What drives the story is repealing high-income surtaxes and reducing Medicaid. The low-income folks are also losing health insurance credits," said Gordon Mermin, a senior research associate at the Tax Policy Center.

The Tax Policy Center is a joint venture by the Urban Institute and the Brookings Institution. The Health Policy Center is part of the Urban Institute.

In all, the Senate bill cuts Medicaid, the health insurance program for the poor, by $772 billion over the next decade, according to the nonpartisan Congressional Budget Office. It cuts taxes by $700 billion, with most of the benefits going to corporations and high-income families.

The biggest tax cut would save wealthy investors about $172 billion over the next decade.

Obama's health law enacted an additional 3.8 percent tax on investment income for married couples making more than $250,000 a year and individuals making more than $125,000. The Senate bill would repeal the tax this year.

About 90 percent of the benefit from repealing the tax would go to the top 1 percent of earners, who make $700,000 or more, according to the Tax Policy Center.

Sen. John Thune, R-S.D., said some Senate Republicans are pushing to keep the tax, and use the revenue to maintain health insurance coverage for more low-income people.

The proposal, however, is opposed by many conservatives.

"Look up the definition of 'repeal' in Webster's Dictionary," said Rep. Dave Brat, R-Va., a member of the conservative House Freedom Caucus. "I don't think that's repeal. It's pretty simple. Our position is, we promised for seven years to repeal. Ran on it. Everyone's on the film clips saying they're going to do it. Now it's show time. Let's go."

The bill would also repeal a new Medicare payroll tax on high-income families, saving them about $59 billion over the next decade. Obama's health law enacted an additional 0.9 percent payroll tax on wages above $250,000 for married couples and above $125,000 for individuals. The Senate bill would repeal the tax in 2023.

Some lower-income families would get tax cuts, too. But for most, they would be overshadowed by cuts in health benefits.

The bill would repeal a tax penalty for people who do not get health insurance, saving them $38 billion over the next decade.

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Follow Stephen Ohlemacher on Twitter at: http://twitter.com/stephenatap

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