New Tax Law Unnecessarily Attacks Health Care, Says APA

Congressional Republicans along with President Donald Trump celebrated the passage of a sweeping tax reform bill last month that slashes corporate taxes while also gutting the central tenet of the Affordable Care Act (ACA). Expressing disappointment, APA said the bill causes “unnecessary damage” to the nation’s health care system.

The core of the Tax Cuts and Jobs Act is a huge cut to the corporate tax rate, dropping it from 35 percent to 21 percent. The measure also cuts individual tax rates for all income tax levels, with most of the benefits going to those earning more than $300,000, according to the nonpartisan Tax Policy Center.

Workers earning $75,000 a year will pay an average of $910 less under the new law, according to a table from the nonpartisan Joint Committee on Taxation (JCT). Meanwhile, high-income earners will get a much bigger break: individuals earning $750,000 will pay on average $23,250 less. After 2025, nearly all the individual income tax provisions expire, except for those with the highest income.

The final bill passed the House 224-201, with no Democrats backing it and 12 Republicans dissenting. The president signed the bill just days before Christmas.

Repeal of the individual mandate penalty in the ACA “sacrifices the health care of 13 million Americans who will lose their insurance by 2027,” said APA CEO and Medical Director Saul Levin, M.D., M.P.A., in a press statement. The change is projected to save the government $338 billion over a decade.

Overall, the tax measure is projected to increase the nation’s debt by just over $1 trillion over the next decade, the JCT noted.

“By significantly raising the federal deficit, this bill sets the stage for future cuts to Medicare and other critical safety net programs,” Levin said. “What is being sold as a tax cut bill is also an attack on our health care system. There is no reason for these two issues to be decided by the same vote.”

According to a coalition of six physician organizations of which APA is a member, repealing the individual mandate will increase premiums and destabilize the individual and small group markets as the healthiest subscribers drop coverage. Thus, insurers would need to raise rates dramatically to cover the remaining, sicker customer base, rendering the plans unaffordable, or may simply choose to drop out of the marketplace altogether. In fact, the Congressional Budget Office estimates that removing the individual mandate will bump up premiums in the plans 10 percent every year for the next decade, resulting in a 259 percent total increase.

In 2016, about 7 percent of Americans acquired coverage through the individual insurance market, according to the Kaiser Family Foundation. People with mental illness were more likely to be insured after the implementation of the ACA (5 percent before versus 13 percent after), according to a recent APA survey.

“We need Congress to pass legislation that will stabilize the ACA markets and shore up our health care system,” Levin said. “We stand ready to work with Congress on a thoughtful, bipartisan approach to health care reform.”

Other important protections provided by the ACA were not changed by the new law, including protections for people with pre-existing conditions, tax credits for people who buy their own insurance, mandates on coverage provided by insurers who offer plans in the marketplace, and the expansion of Medicaid programs in dozens of states that enacted it. In addition, no changes were made that impact health savings accounts. These are savings accounts linked to high-deductible health insurance plans and exempt from tax liability. ■