What the new tax law likely will and won’t do to the nation’s health care

Photo: 401(K) 2012 via Flickr

The House and Senate this week finally passed major tax reform and sent their bill to President Donald Trump for his signature. We’ve posted a revised tip sheet about the legislation that reflects final provisions impacting health care issues.

In general, the final bill looks more like the Senate version than the House’s where health and the health sector are concerned. That is generally good for health care consumers, providers and universities, except – and it’s a big, big except – for an effective repeal of the individual mandate.

Technically, the mandate wasn’t repealed, just the penalty for ignoring the mandate – meaning that for consumers it’s moot. Other provisions related to the mandate language remain and are important for the continued functioning of the law and consumer protections.

It’s also important to note that the mandate repeal is not effective until 2019 – people still need to be covered in 2018 or face a penalty. That hasn’t been widely reported.

The CBO says the mandate repeal will mean 13 million fewer people will be covered (some by choice) in a decade, and premiums will rise. Not all experts agree that the change will be that dramatic because the mandate was weak, and did not influence consumer behavior as much as the ACA’s architects had hoped.

But it will matter. As Tim Jost writes on the Health Affairs blog:

Repeal will undoubtedly do harm, however, to insurance markets and those who depend on them. The effect will vary from state to state, but premiums will increase in the individual market across the board, and increase dramatically in some states. Insurers may well abandon some states with smaller markets.

As many of us have speculated about what insurers will do regarding future exchange participation – Jeff Young from the Huffington Post actually called a bunch of them. None have said they were running straight for the exits, but many sound very cautious about the “big mess” ahead sans mandate.

Some in Congress, notably Sen. Susan Collins (R-Maine) who conditioned her vote for the tax bill on it, had hoped to pass the bipartisan stabilization legislation sponsored by Sens. Lamar Alexander (R-Tennessee) and Patty Murray (D-Washington) by year’s end. The legislation would resume the cost-sharing reduction subsidies ended by the president, but as of December 21 it hadn’t been added to the short-term year-end spending bill. At this point the fix also looks unlikely to be part of the longer-term spending bill to be addressed in January (though like everything else in health care these days, that could change).

President Trump, of course, has hailed the mandate repeal and contends that mandate repeal equals Obamacare repeal. Perhaps that means he’s ready to move on and put repeal behind him. But perhaps not. The mandate, he said, needed to be replaced, possibly with block grants. Or maybe with what he’ll call “something terrific.”

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