So it was jarring to see a comment Ryan made in an interview with Charlie Rose on Wednesday, after Rose asked him to detail Republicans’ plans to replace Obamacare:
We also think that a refundable tax credit is a smarter way to get people the ability to go buy insurance that they like that they can afford. That's better than [Obamacare's] subsidies. A refundable tax credit means you get assistance to regardless of your income tax liability to buy care.
The only problem with this — as Slate’s Jordan Weissmann, who was the first to notice the comments, points out — is that Obamacare’s subsidies are literally a refundable tax credit. They’re specifically known as the “premium tax credit,” and you can read all about them at the IRS’s website.
What Ryan is saying is like suggesting that we should replace police departments with municipal agencies that investigate crime, or replace the Navy with a collection of armed sailors on boats and submarines. It makes no sense.
Now, Ryan does want to change what kind of refundable tax credits people receive. Currently, the Affordable Care Act offers a sliding scale of credits, with poorer households receiving the most assistance. Eventually the credit tapers off until it’s totally eliminated for people making more than four times the poverty line ($97,000 a year for a family of four).
Ryan wants to replace that with a universal credit, offered to both poor and rich families, varying in size only based on the recipient’s age (so that older people get more assistance). Ryan has not said how large he wants that credit to be, but if it is to cost as much or less than Obamacare’s credits, it’ll have to be considerably smaller than the maximum Obamacare subsidy. Money now going to poor families would have to be redirected to upper-middle- and upper-class families not currently receiving subsidies.
That change would be combined with a dramatic loosening of regulations regarding how generous health plans must be, and how high their deductible and copayments can go. Insurers would be able to charge older people more than they can now, potentially offsetting the bigger tax credits they’d get. So a family of four making, say, $30,000, toward the bottom end of the Obamacare subsidy range, would likely see support dwindle and be forced to buy a plan with much higher deductibles, copays, and coinsurance.
That is not a super-compelling pitch for the policy, so Ryan instead just made up some nonsense about refundable tax credits. The problem is not that Ryan is ignorant. He knows perfectly well that Obamacare uses refundable tax credits. And that makes the weird dishonesty of his approach to selling the Republican replacement effort all the more baffling.
Author: Dylan Matthews