Congress is currently considering passage of the American Health Care Act (AHCA). This bill would repeal large portions of the Affordable Care Act (ACA), including most of its sources of revenue, and it would introduce significant changes to the Medicaid program and the private nongroup insurance market. We use the Urban-Brookings Tax Policy Center Microsimulation Model and the Urban Institute Health Policy Center’s Health Insurance Policy Simulation Model (HIPSM) to allocate changes in taxes and federal health benefits across families grouped by income.
We find that the AHCA’s changes to federal taxes and health care benefits would be very regressive: taking both tax reductions and benefit reductions into account, the average high-income family would be significantly better off and the average low-income family would be significantly worse off under the AHCA. The average family with less than $10,000 of income in 2022 would be $1,420 worse off, a net reduction of more than 30 percent of the family’s income. The average family with more than $200,000 of income in 2022 would be $5,640 better off, a net increase of 1.1 percent of the family’s income. Using a measure of family income as a percentage of the federal poverty level (FPL), families with income below 200 percent of FPL would experience net tax and benefit losses and families with income above 300 percent of FPL would experience net gains under the AHCA. The greatest net gains would go to families with income exceeding 600 percent of the FPL.