Republican Obamacare repeal would benefit wealthiest: study

WASHINGTON (Reuters) - A Republican plan to repeal taxes set under Obamacare would benefit the wealthiest U.S. households at more than five times the rate for middle-income families, according to the nonpartisan Tax Policy Center.

Copies of amendments offered during a marathon House Energy and Commerce Committee hearing on a potential replacement for the Affordable Care Act are seen on Capitol Hill in Washington March 9, 2017. REUTERS/Aaron P. Bernstein

"The effects are really very dramatic. We found that a typical middle-income family would get a tax cut averaging about $300, while people in the top 0.1 percent would get a tax cut of about $207,000," Howard Gleckman, a senior fellow at the nonprofit research group, said on Monday. (

The expected benefits equal 2.6 percent of a wealthy family’s after-tax income, but only 0.5 percent of the income of a middle-class household making $51,600 to $89,400 a year, including fringe benefits like employer-provided health insurance, the center estimated. The top 0.1 percent of U.S. families have income of at least $3.9 million.

The proposed changes are part of a plan backed by Republican President Donald Trump to repeal and replace the law officially known as the Affordable Care Act, former Democratic President Barack Obama’s signature domestic legislation. All told, the tax portion would eliminate levies worth $600 billion in revenues over a decade.

If adopted, the plan could be the first in a series of tax cuts promised by Trump, who has vowed to lower taxes further through separate legislation to overhaul the U.S. tax code.

The Congressional Budget Office, which provides official cost estimates for legislation, on Monday said 14 million more people would be uninsured in 2018 and 24 million more in 2026 if the plan being considered in the House of Representatives were adopted. The Republican plan would also reduce federal deficits by $337 billion between 2017 and 2026, the office said.

House of Representatives Speaker Paul Ryan, the Republican healthcare plan’s top backer in Congress, and House Democratic leader Nancy Pelosi’s office had no immediate comment.

Trump defended the Republican plan on Monday, telling a group of Obamacare opponents that the replacement would offer more coverage choices at lower costs.

Obama raised taxes on the wealthy to fund healthcare benefits for middle- and low-income Americans under his healthcare law, which has extended coverage to 20 million previously uninsured people through subsidized private coverage and the Medicaid program for the poor.

Democrats charge that Republicans would now help the rich at the expense of families who depend on Obamacare subsidies.

The repeal of just two ACA taxes - a 3.8 percent investment tax and a 0.9 percent Medicare payroll tax on people earning $200,000 or more a year - would return about $275 billion to taxpayers over 10 years, the congressional Joint Committee on Taxation, or JCT, said in a report last week.

About 60 percent of that sum would go to those with incomes of $1 million a year or more, according to a Reuters analysis of JCT data released only to Congress.

In addition to the investment and hospital taxes, the Tax Policy Center also included the effects of repealing Obamacare’s tax penalties for the uninsured and employers that offer no insurance, and excise taxes on healthcare providers and insurers.

The researchers found that 40 percent of benefits from the proposed tax changes would go to households earning more than $772,000 a year in 2022, when the cuts would be fully effective.

Reporting by David Morgan; Editing by Lisa Shumaker and Cynthia Osterman