IMF urges US to 'protect' gains won under Obamacare
The International Monetary Fund on Thursday weighed into the US health care debate, urging the Trump administration to "protect" the gains achieved under President Barack Obama.
As the US Senate continues the heated debate over repealing the Affordable Care Act implemented under Obama, the IMF released its annual report on the US economy and warned about the potential damage threatened by the proposed replacement.
"Health care policies should protect those gains in coverage that have been achieved since the financial crisis (particularly for those at the lower end of the income distribution)," the IMF staff said in its Article IV report.
The changes contemplated would either lead to a loss of coverage or the need for increased federal subsidies to sustain the same level of coverage, and "a significant increase in costs for older and poorer individuals whereas the embedded tax relief would be mostly incident on higher income households."
They argued that doing so will help the US economy by increasing productivity and labor force participation.
"This, in turn, will strengthen growth and job creation, reduce economic insecurity associated with the lack of health coverage, and have positive effects for the medium-term fiscal position."
While the IMF recognized the "polarized societal views over the appropriate way forward" which makes reaching an agreement difficult, it urged caution in the design of a healthcare reform.
"Such changes ought to be undertaken carefully," and should avoid "excluding those with limited incomes from the healthcare system."
The US authorities responded to the report by saying Obamacare is "fundamentally flawed and a new approach is required."
The IMF last month released the main points of the Article IV report, including cutting the growth forecast for the US economy 2.1 percent in 2017 and 2018, down from 2.3 percent and 2.5 percent, respectively.
The downgrade came after it became clear the details of expected fiscal stimulus and tax reforms promised by the Trump administration remained unclear and the US was facing "significant policy uncertainties."
In the full report released Thursday, the fund said, "strengthening growth outcomes and ensuring a more broad-based improvement in living standards will require a transformation of the US economic model."
That will include some policies President Donald Trump has said he favors including tax reform, more effective regulation, infrastructure spending, "reprioritizing federal spending," and "a free, fair, and mutually beneficial trade regime."
However, the report said its discussions with US officials "revealed differences in a range of policy areas and left open questions as to whether the administration's proposed policy strategies are best suited to achieve their intended purpose."