From The New York Times: https://www.nytimes.com/2017/02/16/upshot/republican-health-proposal-would-redirect-money-from-poor-to-rich.html
Republicans in Congress have been saying for months that they are working on a plan to repeal and replace Obamacare in the Trump era. Now we have the outline of that plan, and it looks as if it would redirect federal support away from poorer Americans and toward people who are wealthier.
A white paper drafted by House leadership and the staff of the House and Senate committees that oversee health policy details a structure that could replace large sections of the Affordable Care Act. Crucially, the proposal largely contains provisions that could be passed through a special budget process that requires only 50 Senate votes, and fulfills President Trump’s promise that the repeal and replacement of the law would take place “simultaneously.”
The plan would make major changes in how health care is financed for Americans who don’t get coverage from work. It would greatly expand the number of Americans who could benefit from federal help in buying health insurance, but it would change who benefits most from that support.
Obamacare, as the A.C.A. is known, extended health coverage to 20 million Americans through two main mechanisms. It expanded Medicaid coverage to Americans below or just above the poverty line in states that participated, and it offered income-based tax credits for middle-income people to buy their own insurance. Obamacare was a redistributive law, transferring money from rich to poor.
The Republican plan would alter both of those programs, changing the winners and losers. It would substantially cut funding for states in providing free insurance to low-income adults through Medicaid. And it would change how tax credits are distributed by giving all Americans not covered through work a flat credit by age, regardless of income.
That means that the biggest financial benefits would go to older Americans, like, say, Secretary of State Rex Tillerson. If he didn’t have a job in the Trump cabinet and access to government coverage, a 64-year-old multimillionaire like him would get the same amount of financial assistance as someone his age, living in poverty, and he would get substantially more money than a poor, young person.
The idea of matching tax credits to age makes some sense. Older people tend to have higher medical bills, and insurers, even under Affordable Care Act rules, charge them substantially higher prices. The new plan would also simplify the current system, which requires verifying every applicant’s income and then giving just the right amount of financial assistance. It would also eliminate incentives for low-income people to avoid earning more (higher earners can face a reduction in benefits).