The Health Costs of Tax Reform
Late last year, Republicans rammed a tax package through Congress with no debate whatsoever as to its potential effects on the US health-care system. Unfortunately, the legislation will most likely result in fewer Americans with insurance, stripped-down public programs, and less access to substance-abuse treatment.
NEW YORK – The sweeping tax bill that US President Donald Trump signed into law on December 22, 2017, may have been presented as an early Christmas gift. But to the millions of Americans whose health outcomes will worsen as a result, the legislation looks more like a costly white elephant.
The Tax Cuts and Jobs Act targets health care in the United States in three major ways. First, it eliminates the individual mandate, a provision of the 2010 Affordable Care Act (Obamacare) that imposes a tax penalty on people who go without health insurance. According to the Congressional Budget Office (CBO), this repeal alone will reduce the number of insured Americans by 13 million over the next decade, and increase average health-insurance premiums by about 10%. Moreover, eliminating the individual mandate could disrupt health-insurance markets, because there will be fewer younger, healthier people purchasing insurance.
Second, the CBO estimates that the law will add $1.45 trillion to the deficit over the next decade, which could trigger spending cuts to health-insurance programs for the elderly, poor, and disabled, such as Medicare and Medicaid. These programs are already some of the government’s largest budget items, accounting for $1 trillion in spending – 26% of the federal budget – in 2016. Any cuts to them made in the name of deficit reduction will disproportionately harm the most vulnerable.