Guest Blog – Don’t Be Fooled: The Tax Bill Is Also a Health Bill

Don’t Be Fooled: The Tax Bill Is Also a Health Bill

By: Allison Russo

This week, Senate Republicans are expected to move forward with their version of the tax bill using the budget reconciliation process (the House version of the tax bill already passed in mid-November). The budget reconciliation process requires only a simple Senate majority of 51 votes — in other words, no support required from Senate Democrats. If passed, the Senate version will add up to $1.5 trillion to the federal deficit in the next decade, make corporate tax cuts permanent, and disproportionately benefit millionaires and those earning $100,000 to $500,000. Meanwhile, the newly released Congressional Budget Office (CBO) report concludes that low- and middle-income Americans are left considerably worse off under the Senate tax bill, primarily due to how this bill will impact the affordability of health insurance.

To be clear, this tax bill is also a health bill. Unlike the House version, the Senate tax bill removes the penalty fees associated with the Affordable Care Act’s (ACA) legal requirement to buy health insurance, effectively repealing the individual mandate. This additional repeal provision reduces the federal deficit impact of the tax overhaul by $338 billion dollars over ten years, which is no small piece of change when you are attempting to achieve budget neutrality. However, this money is primarily saved by reducing the number of insured individuals, thereby reducing the number of people receiving some tax credits and subsidies from the government. The CBO estimates that repealing the mandate will lead to 13 million fewer Americans with health insurance by 2027.

Admittedly, the ACA’s individual mandate is the least popular part of the law and has been the main target of Republican repeal efforts since its passage, but the overwhelming majority of health actuaries and economists agree that the mandate is an essential element of a stable individual health insurance market.  Without it, healthy people leave the insurance risk pool, and premiums increase by an estimated 10 percent annually (this increase is in addition to the increases already experienced by the destabilization caused by the elimination of the Cost-Sharing Reduction payments and the discontinuation of the ACA’s risk corridor program). In a March 2017 letter to Congress, the non-partisan American Academy of Actuaries wrote about a potential ACA mandate repeal: “Lower enrollment among healthy individuals would likely result, especially if they would have to pay the premium surcharge due to having prior gaps in coverage, putting upward pressure on premiums, all else equal.”

To make matters worse, complicated budget laws and a looming $1.5 trillion price tag associated with this bill trigger an immediate $25 billion, or 4 percent, yearly cut to the Medicare program (in addition to other automatic cuts to smaller programs ranging from border security to farming). This translates to reduced payments to all Medicare providers and plans, impacting the health care of millions of seniors. The Medicare cuts stem from a law that requires Congress to offset increases in mandatory spending or reductions in tax revenue (such as that created by this tax bill) as a disincentive to increasing the deficit. If Congress violates the provision, the bill makes automatic, draconian cuts elsewhere unless the House and Senate vote to waive the requirement. In a strange twist of fate and Senate procedures, this waiver will require a new bill, 60 votes, and the support of some Senate Democrats. Given strained relationships and list of demands on both side of aisle, a Senate compromise on this waiver is by no means guaranteed.

Meanwhile, as the Senate and House Republicans toil away on their tax bill/health bill, they are not working on the re-authorization of the Children’s Health Insurance Program (CHIP), nor are they authorizing money to fight the opioid crisis. Congress allowed CHIP to expire on September 30, and some states, including Ohio, will exhaust their funding by the end of this month. CHIP currently insures 9 million children nationwide, and 200,000 of Ohio’s children. Congress has also failed to authorize any money in response to the President’s opioid commission recommendations and his official declaration of the crisis as a public health emergency. Ohio’s rate of opioid-related overdose deaths is nearly double the national average, and many local communities and health facilities are overwhelmed by the volume of drug-addicted patients.

If Congressional Republicans really want to claim a health and legislative victory, perhaps they should first finish their work on CHIP and the opioid crisis.

ABOUT THE AUTHOR: Allison Russo, DrPH, MPH, is a public health policy expert and currently the Research Director for Kennell and Associates, a health policy and finance consulting firm. She has authored numerous reports on a wide-range of health care issues including access to appropriate care by vulnerable populations; determinants of health outcomes, the utilization of services, and healthcare costs; and payment policy options that incentivize the delivery of high-quality care. She is an outspoken advocate for universal access to affordable and quality health care and lives in Columbus, Ohio.