GOP Obamacare replacement cuts aid for lower-income people, makes more higher-income people eligible

By Tom Kertscher on Thursday, March 23rd, 2017 at 1:41 p.m., http://www.politifact.com/wisc...aid-lower-income-pe/

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Our rating

Johnson says 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 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.

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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 March 21, 2017 at a WisPolitics 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. The expected House vote on March 23, 2017 was postponed a few hours after this fact check was posted.

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 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 percent and 400 percent of the federal poverty level (in 2017, 400 percent 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, according to Kaiser:

(In Milwaukee, the estimate is that the credit would be $1,280 with Obamacare and $3,000 with the GOP plan.)

Our rating

Johnson says 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 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.

House Speaker Paul Ryan walks to his office on March 23, 2017 ahead of an expected House vote the same day on the Republican plan to replace Obamacare. (Associated Press)

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