(A version of this Health Alert was published by Forbes.)
Republican presidential candidates are starting to roll on health reform. I mean that in a good way, like when the pilot accelerates down the runway and says “Let’s roll”. Governor Scott Walker (WI) just released his 15-page “Day One Patient Freedom Plan.” U.S. Senator Marco Rubio (FL) has written an op-ed in Politico that needs more detail, but contains a significant reform similar to Governor Walker’s.
Both Walker’s and Rubio’s proposals are very good. Let’s focus on private health insurance, leaving Medicare and Medicaid aside for now. Both offer refundable tax credits to people without employer-based health benefits. In Walker’s plan, these tax credits adjust with age (from $900 for a child to $3,000 for someone between 50 and 64 years old). Rubio does not specify whether his tax credits would adjust with age. For political purposes, it is likely better that they do (because older people vote).
The important thing is that the tax credits do not phase out as household incomes increase, which is the major problem with Obamacare’s tax credits. Millions of people have been wrangling with the IRS to figure out whether they received enough tax credits or have to pay some back. Even worse, the phasing out imposes extremely high effective marginal income tax rates on people at certain incomes. Obamacare punishes them for working and earning more. This is likely the main reason for the rise in part-time work in this weak recovery.
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