Tax Bill is Really a Very Destructive Health Care Bill

The US House and Senate have each passed a tax bill and convened a conference committee to decide on a single bill that can pass each chamber. While many details need to be hammered out, it’s clear that the legislation is on track to undermine health coverage for millions and set the stage for massive cuts to Medicaid, Medicare and the Affordable Care Act (ACA).

In summary, health care advocates need to speak out NOW because if the tax bill becomes law, it will:

  • Increase the ranks of the uninsured by 13 million, including 5 million fewer people who get coverage through Medicaid.
  • Jeopardize coverage for people with pre-existing conditions.
  • Trigger an automatic $25 billion cut to Medicare.
  • Set the stage for huge cuts to Medicaid and the ACA and further cuts to Medicare by raising the deficit.

Here in more detail is how the devastation is on track play out:

  • Increase the ranks of the uninsured by 13 million. If the final bill repeals the individual mandate (as the Senate version does), that alone would result in 13 million more uninsured. That 13 million is not just young, healthy people who think they don’t need insurance. It includes 5 million people who could get Medicaid coverage and a lot of people with health conditions who will want insurance but won’t be able to afford it anymore. A key reason is that once the penalty is gone, the incentive for younger and healthier people to buy insurance is a lot less. Insurers will likely have a sicker, more expensive pool to cover. Their costs will go up and, as a result, they will raise insurance premiums or withdraw from the non-group market entirely. As result of repealing the individual mandate, marketplace insurance premiums are projected to go up about 10 percent a year over the next decade.
  • Destabilize the insurance market, jeopardizing health coverage for people with pre-existing conditions. As premium increases put health insurance out of reach for people who need and want it, the Trump Administration has announced that it will dramatically loosen rules on the sale of substandard insurance outside the ACA marketplaces. The combined effect of the tax bill and this executive branch action will be the enormous risk of an unstable market, bare counties and a “death spiral”-like situation in the non-group market. It will mark the return of the time when people with pre-existing conditions could not afford coverage. Repealing the individual mandate will unravel the insurance markets and the ACA.
  • Trigger automatic Medicare cuts. According to the Congressional Budget Office, the tax bill would increase the deficit by a trillion and half dollars or more. There’s a law that requires that new legislation not increase the deficit (Statutory Pay-As-You-Go Act of 2010, PAYGO). If it does, automatic cuts are triggered across the board for dozens of federal programs. Medicare is one. It’s estimated that the tax plan would trigger $25 billion in Medicare cuts in 2018. Medicaid and ACA premium subsidies are exempt from PAYGO cuts, but are far from safe.
  • Massively raise the deficit, setting the stage for big cuts to Medicaid, Medicare and the ACA. The tax bill will increase the deficit by up to $1.5 trillion, inevitably leading to demands for spending cuts. Medicaid, the ACA and Medicare cuts and restructuring will be prime ways that tax bill supporters will look to address the deficit crisis.

For the millions who could end up losing health coverage, this would be the most expensive tax cut ever.