Editor's note: If you appreciate posts like this and want ANC to continue publishing similar content, become a paid subscriber for as little as $1.35 a month.
The recent $1.4 Trillion spending package signed by the President includes some important actions regarding the Affordable Care Act (ACA, also known as Obamacare).
The President and Republicans campaigned on repeal and replacement of the ACA, but to date have produced only a 114 page document that, according to Kaiser Health News, includes “more than two dozen recommendations that broadly focus on loosening federal and state regulations, limiting hospital and insurer market power and prompting patients to be more price-conscious shoppers.”
Essentially, most of these are old ideas that are repackaged, but don’t really do much to alter the delivery or financing systems factors that actually contribute to the high costs of health care.
The administration has been successful in slowly dismembering the ACA and these most recent cuts are most intriguing. Included in the budget bill is the repeal of three taxes. Readers of this column will remember that the ACA provides subsidies to middle income Americans to help pay their insurance premiums. Those subsidies were funded by a series of taxes.
The following three taxes are eliminated: The Cadillac Tax on “overly” generous employer health plans, the Health Insurer Tax and the Medical Device Tax. The elimination of the last two taxes are big wins for the insurance industry and Medical Device Manufacturers. Eliminating the “Cadillac tax” will benefit employers who have expensive or very generous health plans.
It can be argued that the latter two taxes were simply passed on to consumers in the form of increased charges that found their way into our health insurance premiums. The proof will be in the pudding. Will our rates be reduced next year due to the elimination of the taxes? Will medical device manufacturers reduce the cost of their devices? Highly unlikely. But we will be told that the premium rate increase we are receiving is less than it would have been, due to the elimination of those taxes and the additional administrative burden that went along with accounting for them.
The bigger issue is how do we continue to pay for the subsidies that are being collected by insureds? If the taxes are not there to fund the subsidies, yet the subsidies continue, then we are paying for those with our ever-ballooning deficit.
Eliminating these taxes will contribute $373 billion to the deficit, according to an estimate from Congress’ Joint Committee on Taxation. But what the heck, against a current deficit of over $22 Trillion, does it really matter? Our children and grandchildren will bear the greatest burden anyway, right?
Administrations have a habit of implementing new programs and not paying for them. When Medicare Part D was implemented in 2006 without any additional funding, it was expected that it too would raise the deficit. This is the legislation that provides Rx benefits for seniors.
Prior to the implementation of Part D, there was no prescription drug coverage for Medicare Beneficiaries. Drugs were “pay as you go”. According to the Kaiser Family Foundation Medicare Part D benefits cost the federal government $95 Billion or 13% of the Medicare spend in 2018. That was up from $49 Billion or 11% in 2008.
The ACA certainly has its detractors, and the additional taxes imposed were not popular. But one could not accuse the administration of passing a benefit bill and not paying for it.
With high medical costs being one of the leading causes of personal bankruptcy in the US, I find taking away the funding for the subsidies to be the height of hypocrisy.