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Wonk Moment: What Paul Ryan's Unserious Proposal Actually Looks Like

Here it is in one-page outline form: Health Health Insurance For Those Not Covered by Medicare/VA Repeal Patient Protection and Affordable Care Act, which will include rollback of prohibition against pre-existing conditions Continue

Here it is in one-page outline form:

Health

Health Insurance For Those Not Covered by Medicare/VA

  • Repeal Patient Protection and Affordable Care Act, which will include rollback of prohibition against pre-existing conditions
  • Continue corporate tax deduction for employer-sponsored health insurance plans
  • Refundable tax credits of $2,300 (single) $5,700 (family) to pay for health coverage. The credit may be applied against the costs of the plan whether an individual policy or employer-sponsored policy, with payment going directly to insurers.

    The Ryan argument for this approach seems to center around the assumption that the markets will respond positively to individuals shopping for their own insurance with premium assistance credits paid directly to insurers. It ignores, however, the reality of rate-band excesses for individuals with a health issue as defined by the insurer as a pre-existing condition.

  • High Risk Pools for individuals with pre-existing conditions, with the option for states to offer direct assistance with premiums and/or cost sharing.

    Here's a hint to the underlying thought for this, from a summary a bit later in the report (page 48):

    ...many individuals with pre-existing conditions often face bankruptcy to pay for health care expenses or, worse, go without treatment. If these individuals are fortunate enough to have group health insurance, their high costs are spread among their coworkers and employers in the form of ever-higher premiums, making coverage expensive for all.

  • State-based Exchanges. All policies required to meet same statutory standard used for Congress' health cbenefits.
  • Interstate purchase so that an insured can purchase from a company in another state, subject to that State's insurance regulations
  • Association health plans (AHPs) for small businesses to pool together to purchase health insurance for their employees.
  • Electronic Health Records
  • Medical Liability Reform (Tort Reform) - Caps punitive (non-economic) damages and leaves states in charge of crafting solutions to medical malpractice lawsuits.

Medicaid

  • Voucher for families to enroll in private individual health insurance - Gives families with dependent children $11,000 voucher to apply toward health care costs, payable to insurer.
  • Federal Government replaces State Government as administrator - States contribute half the cost of the voucher to the Federal government, Feds administer voucher.
  • Block grants for long-term care and disabled No tax credit for these Medicaid recipients; instead, the states receive a block grant to use as each state chooses.
  • sChip recipients become eligible for the tax credit with no additional benefit attached.

Medicare

  • Eligibility Age Increased from age 65 to age 69 1/2.
  • Automatic payment reduction - If Medicare payments exceed prior fiscal years' payments by 145%, providers automatically paid 1% less
  • Medicare recipients age 55 and older may be covered by current traditional Medicare at Social Security Retirement Age.
  • Younger than 55 not eligible for current traditional Medicare - They will receive a voucher for about $11,000 (adjusted for increased risk) which will be paid directly to the insurer they choose with the balance remaining, if any, to be paid to a Medical Savings Plan (MSA) for "additional health costs". The voucher will be reduced based on income, so that beneficiaries with income between $80,000 and $200,000 (160,000-400,000 for couples) receive 50%, and beneficiaries with incomes over $200,000 ($400,000 for couples) receive 30%.
  • Medical Savings Accounts - Tax-free account for Medicare recipients. Medicare and Medicaid recipients with income less than 100% of the FPL would be eligible for a MSA via Medicare to cover deductibles for the "average Medicare high-deductible health plan". Those with income of 100-150% of the FPL receive 75% of the full amount.

Social Security

  • Increase SSRA to age 67 one year early, then phase increase to age 70.
  • 55 and older - No change to their benefits at Social Security Retirement Age.
  • All others - Must choose to stay in current system or make contributions to private accounts. Investments in private accounts would be made into funds managed by the US Government, similar to the Federal Employees' Thrift Savings Plan options. Currently, those are nonmarketable US Treasury securities, or mutual funds managed by Blackrock. When their account reaches $25,000, they will be allowed to make investments in nongovernment investment options.
  • Shift from Defined Benefit to Defined Contribution Workers who opt for private investment accounts will be shifting their benefits from a Defined Benefit approach (guaranteed benefit at retirement) to a Defined Contribution approach where the individual bears the investment/inflation risk.
  • Inheritable Accounts Funds paid into a private savings account will be deemed to be the property of the individual and may be passed to heirs.
  • Minimum Benefit equal to 120 percent of Federal poverty level in traditional system, 150 percent in "private account" system.

Federal Tax Reform

Individuals

  • Eliminate Alternative Minimum Tax
  • Eliminate taxation of interest, capital gains and dividends.
  • Limits options for simplified or itemized filing
  • Increases standard deductions

Corporations

  • 8.5% Business Consumption Tax on net receipts. Such tax would exclude US exports.
  • Eliminate Corporate Income Tax

Federal Budget Process

  • Caps total Federal spending as percentage of GDP.
  • Tax increases require 3/5ths majority in House and Senate to pass

Now you have the details, given with as little editorial comment as possible. The editorial is coming, but for now, just digest this and tell me what you think.

(crossposted to odd time signatures)

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