Saddle up, here we go.
Let’s cut right to it – the AHCA (aka “Trumpcare”) legislation that Paul Ryan and House Republicans passed last week, at its core, trades the lives of Americans for tax cuts to the extremely wealthy.
It’s not a “plan”, it’s not “reform”, it’s a $765 billion tax cut for the 1%, with window dressing to deceive. It is the single largest redistribution of wealth from the poor to the rich in United States history. And if it passes the Senate, hundreds of thousands of people will lose their lives in the years ahead.
But don’t take it from me – take it from the best investor and businessman of all time (and all-around good guy), Warren Buffett, who said at his Berkshire Hathaway meeting that the AHCA amounted to:
“A huge tax cut for guys like me. And when there’s a tax cut, either the deficit goes up or they get the taxes from somebody else.”
Buffett – a megabillionaire – said the AHCA would have resulted in a 17% cut to his 2016 taxes. Buffett, and this chart (#MATH) don’t lie:
In fact, in 2022, the top 0.1 % would get an average tax cut of $207,000.
Let’s dig in to those economics further…
The Economics of the AHCA
On the financial impact, this legislation is a huge net negative for most Americans. The Republican-led Congressional Budget Office has not yet scored this version of the bill, but the less harmful prior version was estimated to have had the following impact:
- 24 million Americans would entirely lose insurance (26 million if you trust the White House AHCA projections). That is more people losing insurance than if there was a full repeal.
- 7 million would lose their employer-sponsored insurance.
- Premiums were expected to rise significantly for most (as much as 760% for low income individuals in their late 50’s and 60’s).
- Deductibles were expected to increase 40%, on average.
- 3 million jobs would be lost.
The passed version is very similar to the prior that I wrote about, which had a mere 17% approval rating (side note: when have you ever seen 83% of Americans agree on anything?). But, somehow, they made the new version even worse to win a 1-vote margin of victory. This version allows states to claim a waiver on guaranteed issue for pre-existing coverage. And, unfortunately, the list of pre-existing conditions is long.
With the waiver, states could push individuals into “high-risk pools”. In the past, state high risk pools had quota-limited enrollment because they were dramatically underfunded, with years-long waiting lists and lifetime insurance spending caps. To symbolically “address” the pre-existing condition problem, Republicans added $8 billion in high-risk pool funding over 5 years ($0 thereafter) as window dressing, but it’s estimated that as many as 129 million Americans have pre-existing conditions, so the funding won’t cover more than a tiny fraction of the need.
Even if high-risk individuals paid an average of $10,000 in premiums per year, the pools would be under-funded by over $200 billion in the next few years, meaning premiums would spike to unsustainable levels. This would bankrupt many, and force tens of millions to drop insurance altogether. Premiums could even reach as high as $25,700 per year for people in high-risk pools, according to a report from AARP. “Access” means nothing if you can’t afford to pay for it. You or I may have “access” to buy a Lamborghini – it doesn’t mean we have the means.
The passed version of the AHCA would also remove the ban on lifetime spending caps (including for those with employer plans(!!), if employers choose to use them), meaning that any spending beyond the caps won’t be covered and those with catastrophic costs could go bankrupt and/or die. This creates job lock for retirees and employees to certain employers, which limits entrepreneurship and damages the economy as a whole. All of which had been solved by the ACA.
This plan also takes us further away from single-payer, which has proven to result in better care and dramatically lower costs for citizens, on a per capita basis (i.e. Australia pays ~$4,400 per person per year versus $9,200 in the U.S. – with better results). Shouldn’t better care and lower costs per person be the key performance metrics to judge our health care system?
In a nutshell, that’s the economics of this plan. It’s not a populist plan for the little guy. It’s an elitist tax cut for the 1%. And it goes in the face of everything Trump campaigned on (“No cuts to Medicaid”, “Better care at a lower price”, “Everyone will be covered”). How else can you describe that other than “bait-and-switch”?
The Ethics of the AHCA
Now that we’ve covered the economics, lets focus on the ethics, because that’s where I find the AHCA to be the most reprehensible.
It has been estimated that 24,000-29,000 people each year would die from coverage loss (with the more generous previous version). So let’s think about this for a second…
Hypothetical: what if ISIS, North Korean missiles, or Mexican cartels killed 29,000 Americans per year? or in just 1 year? Or even one-tenth of that in 1 year (i.e. 9/11)? What would the perceived horror, threat, & reaction from Americans be? How much would we spend to go to war to combat that?
Unfortunately, there’s not enough media resources or consumer attention span to document and reflect on 29,000 separate individual deaths per year due to legislation versus one big catastrophic event. But that doesn’t make those lives any less valuable, the ethics any more justifiable, or the horror any less real.
We spend $600 billion per year to defend our citizens from those kinds of hideous combat attacks. But when it comes to health care, somehow it’s justifiably OK to trade 29,000 American lives for a tax cut of a comparatively minuscule $76.5 billion per year to the top 1%?
Not only is it OK to and voluntarily chosen by the Republican Party, but apparently it is even gleefully celebrated with a victory speech, rock anthems, and Bud Light. Sometimes the biggest threat to the public comes from within our borders in the form of ink on paper from elected officials.
Meanwhile, real people who didn’t deserve this are living in fear about how they are going to suffer. Here’s a small sampling of stories I found on Twitter…
Perhaps Congressional Republicans should be required to meet with each of these people and tell them to their faces why they should be targeted to pay tens of thousands more due to their bad luck or evils from others, face medical bankruptcy, and/or die to fund this tax cut to the 1%.
Then again, if they did, maybe they’d just lie to their faces about protecting them, as Congressman John Faso (NY) did to a young woman fighting a brain tumor, before he voted “yes” for the AHCA.
We are the richest country at the richest time in history, yet we have the most expensive and archaic health care system of any developed country. We are the lone developed country without universal/single-payer – and we pay the highest costs. Not a coincidence. Health care reform should be finding ways to cover more people, not tens of millions less. Yet somehow this race to the bottom is rationalized as a good idea because the richest will get richer. It’s atrociously unethical.
But, don’t despair! There’s still time to fight this. The Senate needs to decide how or if they will alter this tax cut legislation. If you feel the same way as I do about it, you can fight by speaking out, volunteering, protesting, donating, and voting. You can reach your Congressional (House and Senate) members by calling (202) 224-3121. You can find your House member here and Senate member here. Reaching out to both is advised, because if the Senate passes a bill, it will go back to the House. We need to demand legislation that expands coverage, while lowering costs (either improving upon the ACA or single-payer).
We are better than this.
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Been looking for a reason to unsubscribe instead of just hit delete. Thanks.
What exactly is wrong with this post? The truth hurts…
Sticking one’s head in the sand in the face of facts and opinion that doesn’t 100% jibe with your own to avoid a healthy debate is typically a destructive quality for one’s self and our society. But, that is your right to do so, if you choose.
“Jibe”
Got it. ;-)
G.E. – great post and thank you for it! I agree completely – this is completely a financial related matter. There is no way to argue with that fact that the proposed health care bill is just a sneaky but not really so sneaky excuse for a tax cut for the rich, and a taking away of health coverage for the not so rich without employer mandated coverage.
Maybe he’s the 0.1%. :)
WTF don’t they cut the Great Society entitlements down to size. WTF do acne, AIDS and being a tranny become pre-existing conditions. Before Obamacare, one could get services at a hospital emergency ward and the bills settled later. Since the majority of hospitals are non-profits, a percentage of care would be written off for those without insurance or the financial ability to pay.
Too many of the Demorat base said screw the hospital and doctor bills, like they do for traffic court and other creditors. In time, these POS get a summon to appear in civil court, which almost always they don’t appear for the trial. The judge grants a summary judgment & if defendant has a job, a garnishment.
When people rely on catastrophic care via ER, where do you think those costs go? YOU pay for that in your visit, you just don’t realize it. Isn’t it better to prevent those catastrophes in the first place or have them be covered by insurance?
I’ve never seen so many people eager to pay MORE for something than when it comes to health care in the United States.
Universal health care for all should be a right for all. The fact that we are debating whether or not to give health care to all is a sad story for all of us. Don’t we have a responsibility for all sentinel beings to get the care they need?
Ah man… do we really have to discuss politics on this website too?
Sometimes legislation impacts everyone financially in one way or another – and sometimes it’s REALLY bad. It would be disingenuous for me to not address it, on many levels.
Focus on the facts I’ve laid out here. I’m not making up the figures. Can you objectively look at those facts and say, “This legislation is good”?
Leave your political opinion for your own personal social media page.
Sometimes legislation impacts everyone financially in one way or another – and sometimes it’s REALLY bad. It would be disingenuous for me to not address it, on many levels.
Focus on the facts I’ve laid out here. I’m not making up the figures. Can you objectively look at those facts and say, “This legislation is good”?
Two words : free speech. If you don’t like what he has to say , no one is forcing you to stick around. These days, very few people like to hear the truth or respect other people’s opinions. Very few put themselves in other people shoes to understand what it is like to not have healthcare. I have an excellent healthcare coverage and very grateful for it. I also understand that my circumstances could change and lead me to face something disastrous that could wipe out my life savings and ultimately my life. No one is immune to this. Cancer / diabetes/ heart disease etc. knocks almost every door ….. I am happy to pay more taxes if it means saving a stranger’s life. We all have to lookout for one another. That is what a civilized nation does.
Great stuff! Forwarding this link on to Rep & Dem friends alike and I expect you wont miss any of the unsubscribers!
After reading the comments I just wanted to chime in to say: keep talking and publicizing and exposing! Politics impacts personal finance. We cannot bury our heads in the sand and pretend it isn’t happening. Health care costs are a huge part of planning our finances, so we need to know what is happening in the legislature, how it will impact us, and how we can change it.
Well said! I entirely agree!
This.
Thank you, thank you! Excellent piece.
All the financial planning and savings in the world doesn’t mean a thing when an unexpected significant medical issue results in a 100k, $200k, $300k+ uninsured claim.
I encourage everyone to reach out to their Senators to voice their opposition to this bill. Emailing them only takes a minute or two of your time.
Great article and good on you for sticking you neck out! It’s a lot easier to avoid politics but this is timely and relevant to personal finance. I too will share this article with friends from all political affiliations to offset any unsubscribers.
In case anyone is curious, net +65 subscribers (largest 1 day gain in a long time). ;-)
For them, Party loyalty is far greater than the country loyalty.
So they pass AHCA without reading it!
You can’t fix stupid. Nice try though.
Couldn’t have said it better myself. No matter which side of the political spectrum you’re on, if you stick up for your side 100% of the time then you’re nothing but a party hack with no individual thoughts or ideas of your own. AHCA is bad for everyone in this country.
Great article! Adding you to my list of subscriptions. I appreciate honest, straight forward dialogue.
Great article. For me, if I can’t beat them, I have to figure out a way to join them. I saved my tax refund check instead of spending it so I can invest. I also keep track of my spending by using a site called Whoppered.com to see how many hours I have to work to pay for something. This site helps with curbing your spending habits once you see how much you have to work just to buy it.
When I first heard about Trump as a candidate, I read an article that talked about the positive aspects of his potential presidency. Temporarily, it made me feel *less* disgusted. The main points:
1. “Because he’s a businessman and not a politician, he has a different work ethic. He won’t settle into the position and get lazy once he gets elected (‘like most politicians’). He won’t golf.”
This turned out to be wrong, in record-setting numbers. And not only has he made 16+ visits to golf courses, but he also OWNS them, which is like relaying taxpayer money into a marketing campaign for his own businesses.
2. “Since he has a businessman-like mindset, he’s very good at cutting costs.”
Wrong. The New York City Police Commissioner said that it costs the American taxpayers $113,000/day, on average, to guard Melania and Barron while they stay at Trump Tower rather than the WHITE HOUSE, where they should be HONORED to live. Instead, we lose over half a million $/week.
But thank God he got rid of the US Interagency Council on Homelessness, which he could’ve funded for a full year if he moved Melania and Barron to the White House for a week. Those are the types of programs we NEED to cut.
3. “The wall is a METAPHOR for being tougher on immigration. He’s not *actually* going to build a wall. That’s just talk.”
I don’t even know what to write about this one.
At the end of the day, I’m okay. I’m healthy, for now. I don’t want to think about what might happen if I get sent to the hospital, though.
The sad fact of the matter is that capitalism doesn’t take care of these things. It does some things well and other things awfully. As a result, it will leave millions suffering unless there’s a massive cultural shift towards something that’s more sympathetic. That’s part of the reason why I started my blog, PhilanthroCapitalist. Give at least 10% of your post-tax income away, no matter how much you make.
“We don’t have to engage in grand, heroic actions to participate in the process of change. Small acts, when multiplied by millions of people, can transform the world.” – Howard Zinn
I still believe in capitalism, but I think most people can do more, better. America is not built on low taxes; it’s built on taking risks.
I wrote too much again. I’m sorry.
This blog always seemed a little to the left and got political when it wasn’t needed or didn’t make sense.. but I put up with it because it was balanced with other articles of genuinely useful information.
But this post is the last straw. I have hit the unsubscribe button.
We can have substantive debates on the role of government or the best solutions on federal, state, and local levels but this article doesn’t do that. Or perhaps since its a personal finance blog we could look at free market solutions and how they could actually lower costs and improve ones financial situation. Market competition or tax rates aren’t mentioned here. Instead this article does what the left seems to love to do when the facts don’t work – it appeals to extreme emotion and compares the health care plan to deaths from ISIS or north korea. That’s beyond absurd. You can count me out of your subscription numbers and readership from here on out.
It really doesn’t matter if you’re on the left or the right. I’m certainly a “liberal” but I still occasionally read Mike Cernovich’s “Danger and Play,” because I was reading it long before he started talking about Trump. I read Breitbart. I’ll watch Fox News from time to time, though I’m not a big TV guy.
And I go to Kent State University, which is the epitome of a liberal bubble. I don’t need MORE biased info. I respect other people’s opinions as logical and rational because they usually are.
My point is that if you like 20somethingfinance’s other content, why not just read that?
Sounds like JC is a snowflake in need of a safe place. How dare someone question his worldview with substantive facts!
Also – free market economics don’t work in health care and health insurance.
Lots of large numbers of people losing coverage or paying more, but few details beyond the one line outrages. I don’t see any details on where the tax cuts to the rich are coming from. I haven’t seen anything upon which to make an objective judgement other than emotional generalities. I’m not saying it is incorrect, but there aren’t any details to judge if it is correct.
The tax cuts are funded by cuts to Medicaid, so it impacts the poor the most. Your comment is very confusing – there are plenty of numbers on the impact in the post:
– 24 million Americans would entirely lose insurance (26 million if you trust the White House AHCA projections). That is more people losing insurance than if there was a full repeal.
– 7 million would lose their employer-sponsored insurance.
– Premiums were expected to rise significantly for most (as much as 760% for low income individuals in their late 50’s and 60’s).
– Deductibles were expected to increase 40%, on average.
– 3 million jobs would be lost.
– Even if high-risk individuals paid an average of $10,000 in premiums per year, the pools would be under-funded by over $200 billion in the next few years, meaning premiums would spike to unsustainable levels. This would bankrupt many, and force tens of millions to drop insurance altogether. Premiums could even reach as high as $25,700 per year for people in high-risk pools, according to a report from AARP.
– 129 million with pre-existing conditions potentially impacted.
– 24,000 – 29,000 would die each year.
And there are plenty of links if you’d like to read more. I’d say that’s more than “emotional generalities”.
Thank you for sharing. Great article – it’s clear you put a lot of thought and work into this. Unlike some other commenters, I will NOT be unsubscribing. Great work!