Final GOP tax bill eliminates health insurance mandate
A major Republican effort to reform existing tax law is nearing success as this issue of The Business of Medicine goes to press, with the House and Senate reconciling most of their legislative differences. One provision has remained intact in what appears to be the final version of the bill: A repeal of the individual insurance mandate required by the Affordable Care Act (ACA).
GOP links health insurance to taxes
The most significant development in the tax reform process has been the Republican introduction of a provision to eliminate the current ACA requirement that individuals must purchase health insurance or be subject to a tax penalty. Both the Senate and House bills contain a provision that repeals this individual mandate, which hasn’t been popular with much of the public, but is needed to pay for the ACA’s health insurance exchanges.
The emerging consensus bill between the Senate and House includes this provision, even though the non-partisan Congressional Budget Office (CBO) has estimated that eliminating the individual mandate would result in approximately 13 million more uninsured persons nationwide while also causing insurers to increase premiums by as much as 10% each year. While the CBO acknowledges such projections are difficult because it’s hard to predict the behavior of those individuals who stand to lose insurance, it stands by its prediction of the overall impact. “Despite the uncertainty, some effects of this policy are clear,” the CBO writes in its report. “For instance, the federal deficit would be many billions of dollars lower than under current law, and the number of uninsured people would be millions higher.”
Consensus bill takes shape
GOP leaders in the Senate and House said they have reached an agreement on a final bill, and it appears that this legislation will be more similar to the Senate bill than the House bill. Below are a list of provisions that are expected to be in the final legislation to be signed by President Donald J. Trump:
- Corporate tax rate reduced to 21%; this is up slightly from the 20% rate in the Senate and House bills, but far below the current rate of 35%.
- Lower top individual tax rate of 37%, down from the current 39.6%.
- Eliminate the tax penalty associated with the ACA’s individual health insurance mandate.
- Preserve the alternative minimum tax for individuals, applying to individual with an income of $500,000 or more and couples with an income of at least $1 million or more.
- Individuals can choose how to use the state and local tax deduction. Individuals may be able to deduct up to $10,000 in property taxes, income or sales taxes paid, or a combination of these taxes.
Republicans are pushing hard to have a final bill on Mr. Trump’s desk before Congress leaves for its holiday break.