Again, some of my darkest predictions about the new health care law are coming true. With businesses again clamoring for corporate tax reduction, the go-to in Pay-Go-obsessed Washington are the affordability subsidies for people who will be using the new health care exchanges.
Senate Majority Leader Harry Reid declared that he supported the House Republicans’ decision to pay for the repeal of the very unpopular 1099 provision by significantly increasing the amount of affordability tax credits an individual would need to pay back to the IRS if his or her income fluctuated during the year.
During the health care reform fight, I felt the most critical thing was to focus on getting the underlying structure right–whether there is a public option, design of the risk adjuster, state waiver, size of Medicaid expansion, and a national exchange versus state exchanges. I strongly disagreed with writers like Nate Silver and Kevin Drum, who thought much more focus should be put on the size of the affordability tax credits, because I always viewed those credits as a very convenient pool of money for Congress to slowly drain, since it was meant for only a relatively small group of politically weak lower-income people.
One of my biggest fears was that, because the new law didn’t implement real structural cost control reforms, when future Congresses wanted to reduce costs, instead of taking on the clear waste in the organized health care industry—one with powerful lobbyists–they would instead go the easy route of just slashing the affordability tax credits.
It appears I was wrong only to the extent that I was overly optimistic. I thought these cuts would start happening in a few years, but it has already taken place twice, less than a year after the law was signed.