Q&A: Tax bill impacts 'Obamacare' and potentially Medicare (copy)

In this Dec. 4, 2017, photo, part of the Republican Senate bill "Tax Cuts and Jobs Act" is photographed in Washington. Republican tax legislation advancing toward final votes in Congress could undermine “Obamacare” health insurance markets, and add to the financial squeeze on Medicare over time. This week lawmakers will try to resolve differences between House and Senate versions in hopes of finishing around Christmas. Also in play are the tax deduction for people with high medical expenses, and a tax credit for drug makers that develop treatments for diseases affecting relatively few patients. (AP Photo/Jon Elswick)

Jon Elswick

Most people may think that the summer’s endless fights over attempts to repeal the Affordable Care Act are finally at an end, and we can stop worrying about health care policy for a while. Unfortunately, this is not the case, and yet again, the health of children and families is threatened. The current “tax bill” — that is, as of this writing, headed to a conference committee that will try to reconcile the differences between the House and Senate versions — has some major implications for the well-being of children.

While tax policy may strike one as potentially mind-numbing and arcane, it does serve two very important functions. First, it’s how we raise revenue for our government to operate, so changes in taxation have effects similar to changes in household income — it can drastically alter what is possible. Second, tax policy can serve to incentivize certain activities or actions — for example, offering beneficial tax status for educational savings plans can encourage families to save money for their child’s education, which most would argue is a good idea.

So how do the plans being discussed affect health? Without getting lost in the many details, there’s a few key points:

First, the deficit will grow by over $1 trillion over the next decade. Much like a drop in one’s paycheck affects household spending, for our country it will likely mean cutting back already-strained programs that provide vital supports to families: nutrition assistance, Medicaid, housing, and more.

Second, the fine for not having health insurance (the so-called “individual mandate”) would be eliminated. This doesn’t affect most children directly, but the destabilization of the insurance market would be significant and affect their parents. Those who consider themselves healthy may consider going without insurance, and those with clear health care needs would find their premiums rising — or insurers simply fleeing the market. (You might wonder what this provision has to do with taxes. It only peripherally does.)

Third, those with higher medical expenses have been able to take advantage of being able to deduct those costs. While this isn’t usual for most taxpayers, it’s a major issue for those with larger costs, such as someone with a disabled child. Significant chronic illness or high long-term-care costs also fall under this category. The House bill does away with this deduction.

Fourth, the Orphan Drug Credit has been scaled back or eliminated — this created an incentive for pharmaceutical manufacturers to research and create drugs to treat rarer diseases in which there are smaller markets. While this affects a smaller percentage of the population, this program can be critical for those who suffer from unusual conditions — including children.

There are other ways in which the bill affects families through directly disrupting the economic stability of the home, particularly via changes to the Child Tax Credit, personal exemptions, student loan interest deductions, and more. Additionally, incentives such as the Employer-Provided Child Care Credit and the Dependent Care Assistance Program have been removed, reducing availability of such services to families. While much has been made of “simplifying” the tax code, the reality is that some of the complexity has been intentional, because it creates specific incentives that we, as a society, believe are helpful.

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Finally, on a somewhat related note, let’s not forget: As of Dec. 7, 2017, it will have been 68 days since Congress allowed the bipartisan CHIP program, which has resulted in historic highs in insurance coverage of children, to go unfunded. More and more states are teetering on the edge of sending out notices to families that their coverage will lapse. Gov. Scott Walker earlier this week wrote to Wisconsin’s congressional delegation asking them to ensure CHIP is reauthorized.

Let’s get this figured out, Congress. You’ve never let this program lapse before. It’s time to fix it.

Dr. Dipesh Navsaria, MPH, MSLIS, MD, FAAP, is an associate professor of pediatrics at the University of Wisconsin School of Medicine and Public Health and also holds master’s degrees in public health and children’s librarianship. Engaged in primary care pediatrics, early literacy, medical education, and advocacy, he covers a variety of topics related to the health and well-being of children and families.

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