Originally published on healio.com on December 1, 2017. Written by Janel Miller.
The Senate will debate and may vote on the Republican tax reform proposal today, with several critical health care components still undefined, possibly affecting millions of people and billions of dollars.
“The current draft of the Senate bill would repeal the individual mandate, which requires most Americans to obtain health insurance that meets minimum standards,” Pari Mody, associate of Arnold & Porter Kaye Scholer LLP, told Healio Family Medicine in an interview.
Robert Greenwald, faculty director of the Center for Health Law and Policy Innovation, told Healio Family Medicine that stripping mandatory coverage would allow younger and healthier enrollees to forgo insurance which would result in only patients with serious health needs buying plans through the Marketplace and thus, increase the unaffordability of these plans.
“This would bring us back to the pre-ACA days when far too many people could not afford coverage, and ultimately could not get the care and treatment they needed to stay healthy,” he said.
Additionally, healthier patients may become victims of “junk plans” which may cost less upfront, but may cost more in the long-term and do not cover essential health benefits, he added.
The Congressional Budget Office (CBO) said such a repeal would increase the number of uninsured people to 13 million in 2027, raise average premiums in the nongroup market by about 10% in “most years of the decade” and reduce federal deficits by about $338 billion from 2018 to 2027.
In addition, the New York Times reported that the proposed tax plan would add $1 trillion to the federal deficit, contradicting the Republicans’ claim that the tax bill would allow the economy to grow enough to offset the cost of the plan.
“Last night’s vote was delayed when the Senate Parliamentarian ruled that the proposed ‘trigger’ — to raise government revenues if the Senate tax bill does not achieve the necessary economic growth to offset its costs — would violate Senate reconciliation rules,”
Sebastien Lassuer, a policy specialist at Arnold & Porter Kaye Scholer LLP, told Healio Family Medicine. He added that this trigger would be conflict with the so-called Byrd rule, which prohibits items that do not have a direct budgetary impact. Lassuer also said reports indicate that several Senators, including Senator Bob Corker (R-Tenn.) are now asking for the plan to contain a $350 billion tax increase 6 years into the budget window. “It is unclear whether Republicans will return to the parliamentarian with another trigger that does not violate the Byrd rule or a different plan altogether to gain the support of Sen Corker and other deficit hawks,” Lassuer said.
Current status of votes
As reported in The Washington Post, if three Senators vote no, the tax bill will be defeated. The newspaper cited a “handful” of lawmakers that remained “uncertain or undeclared” as of early yesterday afternoon. That newspaper also reported that Senator John McCain (R-Ariz.), said he would support the tax bill. It was he, Lisa Murkowski, (R-Alaska) and Susan Collins (R-Maine) that cast the votes earlier this year against the so-called ‘skinny repeal’, an attempt to repeal and replace the Affordable Care Act.
Mody told Healio Family Medicine that since then, Collins reached a deal to have two bills — the Lower Premiums through Reinsurance Act of 2017, which would provide states with federal grants to create invisible reinsurance programs and high-risk pools; and the Bipartisan Health Care Stabilization Act, which would temporarily fund federal cost-sharing reduction payments that assist in paying back insurers that must offer cost-sharing subsidies to certain low-income marketplace enrollees — signed into law before the conference report on the tax reform bill is enacted.
Trump said he would support these two bills, Mody said, noting that the CBO estimated the interaction between passing the Bipartisan Health Care Stabilization Act and individual mandate measures would be “small” and adding that the Bipartisan Health Care Stabilization Act would do “little to blunt the impact on the individual mandate repeal.”
Orphan drugs, medical expenses
Mody also noted the current Senate bill lowers the orphan drug tax credit from 50% to 27.5% and eliminates a restriction that would “limit qualified clinical testing expenses to the extent that such expenses were related to a drug which was previously approved by FDA for use in the treatment of any other disease or condition, if all such diseases or conditions in the aggregate affect more than 200,000 persons in the United States.”
“Given that the limitation on the orphan drug tax credit is expected to save $29.9 billion over 10 years, I expect leadership to resist removing this provision entirely,” Mody said, adding that that the House version of the tax bill passed on Nov. 16 eliminated the orphan drug tax credit completely. The House bill also repeals the medical expense deduction that allows individuals to deduct medical and dental expenses that surpass 10% of their adjusted gross income, but the Senate version does not, according to Mody. “Repeal of this deduction could have major implications for individuals and families with extremely high health care costs, including long-term and nursing care, major surgery, and expenses related to chronic disease,” she said. “Assuming Senate passage, this difference between the House and Senate bills would be resolved during conference.”
Patients with chronic illnesses and disabilities are most likely to be negatively impacted by the repeal of the medical tax deduction, Greenwald added.
“As insurance plans are pushing more and more out-of-pocket costs onto enrollees, those who need to use their health insurance are facing higher financial burdens,” Greenwald said. “The medical tax helps soften the blow when costs are particularly high.
“Consider a patient undergoing some of the most expensive therapy for cancer or a chronic illness; this person will no longer be able to deduct extremely high medical expenses incurred to keep them alive and healthy. We live in a country where medical bankruptcy is a very real possibility for many of our citizens, and what’s being proposed now will only exacerbate this problem.”
Effect on Medicaid, Medicare
“There are potentially significant implications on mandatory federal health care spending, which could affect Medicare but not Medicaid,” Lassuer said. “Under the current bill, statutory PAYGO — which provides for an across-the-board sequester of non-exempt mandatory spending programs if Congress enacts net deficit-increasing legislation over the course of the year — would be violated, triggering a sequester that must be carried out by the Office of Management and Budget. This would occur unless PAYGO is waived, a maneuver that would require Democratic votes. At this point it is unclear what Democrats will do, but Republicans are assuming they will waive the rule.
“Medicaid is exempt from this PAYGO-trigger sequestration as well as Social Security. This means that the sequester will not lead to Medicaid cuts. Medicare, however, is subject to the statutory PAYGO sequester but cuts are limited to 4%.”
ACP, AARP urge ‘no’ vote
The American College of Physicians sent the Senate a letter urging these lawmakers to vote no on the tax bill.
“The College strongly believes that tax cuts and other initiatives should not come at the cost of automatic cuts to programs that serve individual and public health, including Medicare, Medicaid, the [CDC] and other agencies,” Jack Ende, MD, MACP, and ACP president, said in a statement.
“Rather than continuing the effort to repeal current-law coverage under the ACA through budget reconciliation measures, or otherwise, we urge Congress to work together in a bipartisan manner to improve coverage and lower costs,” he continued. “Repealing the individual insurance mandate, as part of this legislation or any other, would only result in harm to our patients as would any cuts to Medicare or other vital health programs.”
The American Association of Retired Persons also sent a letter to the Senate, expressing concern regarding the tax bill’s short- and long-term financial impact. “The Tax Cuts and Jobs Act will increase the deficit by approximately $1.5 trillion over the next ten years, and an unknown amount beyond 2027. The large increase in the deficit will inevitably lead to calls for greater spending cuts, which are likely to include dramatic cuts to Medicare, Medicaid, and other important programs serving older Americans,” AARP CEO Jo Ann C. Jenkins wrote. “Unless Congress takes action, the reconciliation legislation will result in automatic federal funding cuts of $136 billion in fiscal year 2018, $25 billion of which must come from Medicare. Such sweeping cuts would be detrimental to an already vulnerable population.”
Food Law & Policy, Commentary
FLPC Publishes Updated Legal Guide on Federal Liability Protections for Food Donation
March 16, 2023