Donald Trump promised to repeal Obamacare on day one of his presidency. That didn’t exactly pan out for the Donald. In fact, when he finally got around to pushing forward Speaker Paul Ryan’s American Healthcare Act, the president couldn’t muster enough votes — even within his own party — to bring the bill to the floor. In what was an embarrassing defeat for Trump, Obamacare stayed intact, and even picked up some steam among Republicans. Now, Trump wants to tackle healthcare again, insisting that the repeal and replacement of Obamacare must be done before moving on to tax reform. But Trump is missing one key thing
Is Trump's Healthcare Going To Happen?
President Trump is really sticking to his promise to get rid of the Affordable Care Act. He’s refusing to go into tax reform until his healthcare plan is finalized because he says that his healthcare reform will provide hundreds of millions in savings that would then pad tax reform. But he’s forgetting one minor detail ….
Trump is looking to eliminate taxes built into Obamacare back in 2010. Those taxes have often been the subject of criticism from Republicans, particularly the higher income families. There’s currently a 3.8% tax on investment income, with additional taxes for medical devices, along with increased taxes for top earners. The glaring issue which is holding up Trump on tax reform is that he wants to eliminate those taxes, which, paired with spending cuts, would save roughly $150 billion towards the country’s budget deficit over the next 10 years. However, while he might cut down on the deficit, he’d also cut out $1 trillion in federal revenue over that same period of time. In addition to those ACA taxes, Trump’s plan is to reduce Medicaid until he can eventually do away with it altogether. And that’s one major hurdle where he ran into a brick wall during his first attempt to repeal Obamacare.
How does Trump plan on passing his reform this time?
— one Vox (@oneVoxdotcom) March 24, 2017
Simply put, he’s threatening to withhold federal subsidies to insurance companies in order to get Democrats to vote with him. Without those subsidies, millions of Americans who rely on the ACA’s subsidies to help cover medical bills would be priced out of coverage. And that’s something Democrats will do anything to avoid.
Watch the news from Fox Business regarding Trump's insistence on healthcare:
Will it work? Only time will tell. Eventually, though, Trump will have to compromise. While Trump insists he has to reform healthcare first, that’s not actually the case. But because of the taxes built into the ACA, reforming it before taking on taxes would just be easier and more convenient — though not necessary. Eventually, Trump has to take on tax reform, with the 2018 budget coming up. Otherwise, it sits on the backburner for another year. As the healthcare debate continues to boil, investors would be wise to avoid buying insurance and hospital stocks, as uncertainty will send shares DOWN.
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