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Speaker Ryan’s Obamacare “repeal and replace” plan, as I’ve been predicting, is a complete fiscal disaster.
Not only will it add $1.1 trillion to the Federal deficit over the next decade, but, more importantly, it reforms exactly nothing.
It leaves Obama’s big Medicaid expansion virtually in place, swaps one kind of tax credit for another in the individual insurance market and leaves the huge, perverse tax subsidy — amounting to upwards of $350 billion per year — for employer plans completely untouched.
This latter point exemplifies the Profiles in Cowardice that suffuses the Ryan Plan; and shows that if the legislation ever does make it through the House and Senate, it will cost every penny as much as Obamacare when all the vote getting deals are finally done.
From a fiscal perspective, the Ryan plan starts $1.1 trillion in the hole on a ten-year basis because it repeals, appropriately, the individual and employer mandates and the Obamacare taxes on providers, high cost plans, medical devices and high income taxpayers.
The mandates would have generated nearly $300 billion in fines over the next decade, according to the Congressional Budget Office (CBO), and upwards of $800 billion from the Obama tax grabs.
So the new plan is bleeding $1.1 trillion in red ink before the black ink is dry on the remainder of its 123 pages.
Likewise, an earlier draft of the Ryan plan provoked an outcry from fiscal hawks in the Freedom Caucus and Republican Study group because it established a new entitlement in the guise of reform.
In typical fashion, however, the revised plan puts a fig leaf over Ryan’s age-based tax credit entitlement by eliminating Bill Gates’ eligibility for a $4,000 tax credit (he’s 61) — along with a few million other American households in the super-affluent tier.
I doubt, however, whether anyone who can do 5th grade math will be fooled by Ryan’s double shuffle. The new provisions still amount to a massive tax credit entitlement that in some ways is for more profligate than Obama’s health exchange premium subsidies.
In theory, upwards of 95% of households are eligible to claim some or all of these tax credits which range from $2,000 to $4,000 per person based on age brackets. That’s a multi-trillion entitlement under any other name.
Then again, the tax credit for individual policies is only the tip of the medical entitlement iceberg.
The U.S. has a sweeping medical entitlement system that will cost more than $24 trillion over the next decade, but Ryan’s new plan simply perpetuates the status quo.
These entitlements amount to …read more
Source:: Daily Reckoning feed
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