i9 Fact Checker: Republican Ad goes after Finkenauer’s tax and health care stance

Published: Oct. 1, 2020 at 5:30 PM CDT
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CEDAR RAPIDS, Iowa (KCRG) - A new ad from a GOP PAC is going after Democrat Abby Finkenauer in her race to keep her seat in Iowa’s First District against Republican Ashley Hinson.

SOURCE: TV ad titled “Personal”, now airing in Iowa from the Congressional Leadership Fund, a Republican Super PAC.

CLAIM: “Abby Finkenauer supports raising payroll taxes nearly 20%, which could cost the average worker $1,200”

ANALYSIS: This claim centers on Rep. Finkenauer’s support for HR 860, known as the Social Security 2100 Act, she is one of 208 co-sponsors of it (all of them Democrats). The bill is a significant reform to the Social Security system to prevent it from running out of money until at least the year 2100. It also increases the minimum benefits to 25% above the poverty line, making more of the benefits tax-free, and then setting a new formula to account for higher cost of living increases for older Americans.

The claims in this attack ad focus on the tax increases it enacts to pay for all of it, primarily through an increase in the payroll tax. This bill would raise the current rate of 12.4% to 14.8% by 2043, increasing by 0.1 percentage points each year. For a worker earning $50,000 per year, that adds up to $1,200 a year, according to the conservative research firm The Heritage Foundation. The bill also subjects earnings above $400,000 a year to the payroll tax. Right now, anything over $132,900 is not subject to the payroll tax.

Supporters note this puts Social Security on more secure financial footing and increases benefits for recipients who need it, two statements backed up by Congressional Budget Office analysis. Critics argue the higher taxes are not needed and puts more of a burden on working Americans to support retirees by not addressing the underlying issues with Social Security benefits. The Heritage Foundation, along with Republicans in Congress, argue cutting benefits for wealthier recipients would save enough money that tax increases would not be needed.

CONCLUSION: It’s important to note that the calculations The Heritage Foundation made are based on the final payroll tax hike in 2043, so the $1,200 figure is not immediate. That’s why this claim gets a 'B'.

CLAIM: “Finkenauer supported radical healthcare schemes that would cost us even more: a $32 trillion price tag and could force up to 52 rural hospitals to close.”

ANALYSIS: This claim centers on Rep. Finkenauer’s support of Medicare-fo-All, which is not all that clear. In 2017, during a meet and greet, a video captured her saying “what I see working the best would be Medicare-for-all.” But we could not find any other actions, articles or publications where Rep. Finkenauer supports Medicare-for-all, which would give all Americans government health insurance through Medicare.

Instead, her campaign confirms Rep. Finkenauer supports a public option plan, which would give Americans the option to buy into a government-run, Medicare health insurance plan but it would not be required. That is an important distinction because of the other parts of this claim.

The $32.6 trillion price tag comes from a 2018 study by a George Mason University professor, which other estimates have since supported, specifically for the Medicare-for-all option. That study notes even doubling “projected federal individual and corporate income tax collections would be insufficient to finance the added federal costs of the plan.”

The study also projects overall health care spending would decrease overall health care spending by up to $2 trillion. However, the study’s own author told in 2018 that he thought those savings projections were unrealistic, which is why he did not highlight it as a key finding of his study. Even Bernie Sanders has cited the $30-$40 trillion cost of his Medicare-for-All plan.

The claim 52 rural hospitals could close is based on a 2019 study by consulting firm Navigant. It looked specifically at the impact of a public option on finances for rural hospitals if people shift to Medicare and away from private insurance plans, which typically pay hospitals and providers higher reimbursement rates than Medicare. It identified 52 Iowa hospitals facing a “high-risk of closure” under a worse-case scenario where most employers also shift their company insurance plans to Medicare.

This claim and study take into account several assumptions that could drastically change the outcomes. For example, the study said reimbursement rates from Medicare would need to increase 40-60 percent in order to keep hospitals whole, so closing 52 hospitals would be based on the assumption Medicare rates don’t change.

It’s worth noting, Rural hospitals are also facing this threat even without changes to the health care industry. Navigant had a separate study that identified 17 rural Iowa hospitals already facing a high risk of financial closure.

CONCLUSION: But the two substantial claims here are based on different health care proposals: the public option, which Rep. Finkenauer supports, and Medicare for All, which she has not. While the Medicare-for-all and the public option plan are in the same family of health care solutions, there are nuanced differences that matter, which was a key issue in the Democratic Presidential Primary.

That distinction means one of these attacks is misdirected. That and some missing context is why this claim gets a 'C'.

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