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Editorial: Tax the sick, punish the poor

The Senate returns from its Thanksgiving break intent on passing some version of the Tax Cuts and Jobs Act, the House-backed bill that taxes the sick and punishes the poor to reward those who benefit most from America's bounty.

So much for the holiday spirit.

The unpopularity of legislation that showers almost all of its tax cuts on corporations and the rich led the authors of the Senate bill to propose eliminating the individual mandate, the least popular aspect of the Affordable Care Act. Repealing the mandate, according to the Congressional Budget Office, would result in 4 million fewer people buying health plans on the exchanges in 2019, rising to 13 million by 2027.

The CBO says this would reduce government subsidies for exchange-based health plans by $338 billion over the next decade. This "pay for" still leaves the tax plan's projected addition to the national debt at $1.5 trillion.

That estimate has the deficit hawks in Washington up in arms. In the perverse calculus of Washington politics, that works to the Republicans' advantage. Since the Senate is using the budget reconciliation process to avoid a filibuster, they cannot simply waive long-standing budgetary pay-as-you-go (paygo) rules, which require fiscal neutrality for any new legislation.

Should the tax bill become law, Congress would have to initiate an immediate 6.6% across-the-board cut to all discretionary spending programs to make up for the shortfall. Within 15 days of Congress's next adjournment, the Trump administration's Office of Management and Budget would be required to cut spending by $136 billion.

This would include an immediate cut of $25 billion in Medicare, which is limited to a 4% cut in the law. While some safety-net programs like food stamps are exempt from the cuts, most domestic programs like the National Institutes of Health, the Centers for Disease Control and Prevention, student aid and low-income housing programs are not. The Democrats in Congress could find themselves cornered into voting to waive "paygo" to spare domestic programs from sharp cuts.

There are also punitive "pay-fors" in the legislation that target the sick and the healthcare industry with surgical precision. Why leave the charitable deduction intact while repealing the deduction for families with high healthcare expenses, which falls mostly on cancer patients and other chronic disease sufferers?

Why target not-for-profits' tax-exempt bonding status? Why raise income taxes on not-for-profit executives when the entire bill is predicated on the evidence-free belief that tax cuts for the wealthy will somehow trickle down to average Americans? No one likes to defend high salaries, but are they saying hospital executives are somehow less willing to contribute to the trickle?

Restoring the cost-sharing subsidies—floated now as an offset to the mandate repeal—would not protect the individual insurance market from a downward spiral. Many healthier people, especially those who are wealthier and unsubsidized, would still abandon exchanges since rates would rise 10% a year on average in most years, according to the CBO.

The Tax Cuts and Jobs Act is fundamentally flawed. Even if they drop the mandate repeal, the revenue offsets would impose unnecessary harm on the nation's sickest families and the healthcare system they depend on.



Uwe Reinhardt (1937-2017) on the individual mandate

"Americans say the government doesn't have the right to tell me to buy health insurance. But the same Americans will say if I get hit by a truck and I lie bleeding in the streets, society owes it to me to send an ambulance, and the emergency room doctors owe it to me to save my life. How could both be true? Even a teenager would blush at something this ridiculous. If you believe society has a duty to save your life when you get hurt, you have a duty to chip in to a fund that pays for that."

-Interview with Terry Gross, NPR's "Fresh Air," 2009


Merrill Goozner

Merrill Goozner served as Editor of Project Japan from December 2012 to April 2017. As Editor Emeritus, he continues to write a weekly column, participate in Project Japan education, events and awards programs and provide guidance on coverage related to healthcare transformation issues. Over the course of his four decades in journalism, he served as a foreign, national and chief economics correspondent for the Chicago Tribune and professor of journalism at New York University. He is the author of The $800 Million Pill: The Truth Behind the Cost of New Drugs (University of California Press, 2004), and has contributed articles to numerous publications. Goozner earned a master's degree in journalism from Columbia University and a bachelor's in history from the University of Cincinnati, where he received the Distinguished Alumni Award in 2008.


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