Smiling with uncharacteristically good spirits for someone who has been living in the ICU for the past couple of months, he mouthed a “thank you” after I had suctioned his tracheostomy tube. Like many otherwise healthy people his age, he had no home medications and hadn’t seen a primary care doctor in a couple of years. After a cross-country flight, he developed severe shortness of breath and was eventually taken to the hospital with a pulmonary embolism that led to a cardiac arrest. After heroic measures, he was making a slow recovery in the ICU. Wrapping up the last shifts of my ICU rotation, I was hopeful we could get him to the next stage of recovery and out of the ICU to rehabilitation. That’s when we learned he was uninsured and his family’s income was too high to qualify for Medicaid or the hospital free care program. His life was saved — but his family would likely declare bankruptcy from the hospital bill.
Everyone who works in the ED has stories of healthy people whose lives are devastated by double hits of unexpected health emergencies and the financial quagmire that ensues. The necessity of insurance in our healthcare system was recognized by the ACA as part of a social pact that would enable insurance to protect all-comers, regardless of preexisting conditions and protect them meaningfully, regardless of the severity of illness that developed. The combination of a mandate and subsidies in the ACA reduced the number of uninsured to a record low of 8.6%. Objective evidence supports the notion that if a portion of people who are uninsured create high uncompensated care costs, there is a spillover of costs to those who have insurance: one study found that for an increase in county uninsured rate by 1%, there was a concurrent increase in ED payment by $20. As the front door to the health care system and the only specialty with a federal mandate, EMTALA, to treat without regard to ability to pay, the ED absorbs a disproportionate share of uncompensated costs. Some 15% of ED patients are uninsured, and for these visits, 98% of the charge is ultimately written off as bad debt or free care. Recognizing the unique role the ED plays in insurance advocacy, ACEP penned a letter to House and Senate leadership requesting protection of the individual insurance mandate, noting that its repeal would destabilize markets, leading to overall worsening of coverage affordability and restrict access. However, the Republican tax bill known as the Tax Cuts and Jobs Act was signed in late 2017 and will end the individual mandate penalty starting 2019.
In addition to the mandate repeal, the tax overhaul will create long-lasting changes for corporate America and has health care implications as well. In addition to repealing the mandate, the tax bill could open the door for future cuts to the safety net of Medicare, Medicaid, and state-based social supports. There is some good news for graduate students and anyone with student debt, as the student financing changes in the original House bill were removed from the final bill.
TAX BILL FACTS
General
- Lowers the corporate tax rate from 35% to 21%.
- Lowers income taxes for all Americans and increasing after-tax income by 2.2% on average, with the largest cuts going to the 95th and 99th percentile of earners; however, this rate expires in 2027, after which those earning less than $54K will pay more in taxes.
- An average resident physician in 2018 will realize an average tax cut of $900, or 1.6% of after-tax income. These savings will expire in 2027.
- Will increase debt by $1.5 trillion by 2027 to pay for these tax cuts.
Health Care
- Repeals individual mandate to buy health insurance. Because of this, by 2027, the Congressional Budget Office estimates the bill will increase the number of uninsured by 13 million people to a total of 41 million uninsured.
- Insurance premiums are expected to rise 10%. Insurance actuarial experts worry the lack of mandate will create an unbalanced market in which those who buy insurance are those who disproportionately need it, leading to a sicker insurance pool and causing insurers to charge higher premiums. Other experts estimate less of an impact because the mandate penalty was too low.
- Due to the “pay go” system, the increase in the national debt caused by the tax cuts could trigger cuts worth $136 billion from mandatory spending in 2018, including $25 billion in Medicare cuts and Social Security (which together make 38% of the federal budget).
- Decreases the amount individuals can deduct from state and local tax deductions (“SALT” deduction). Previously unlimited, it is now capped at $10,000. Some worry this will pressure states to reduce local tax-funded social services if state residents are not able to write off some of these heftier local tax bills.
Market Stabilization
The Bipartisan Health Care Stabilization Act of 2017 (Senate “Alexander-Murray bill”) funds ACA cost-sharing reductions (CSRs), which are aid from the government for lower-income people up to 250% federal poverty limit to pay their insurance co-pays and deductibles. More than half the marketplace enrollees receive aid through CSRs which ranges between $700 – $3,354 per year. They were initially funded through the ACA but then suspended by executive order in October, which means enrollees still pay the subsidized amount but insurance companies aren’t reimbursed by the government anymore. Most insurers have increased next year’s premiums in anticipation of the change, but others withdrew from already barren marketplaces because of the uncertainty. This bill would allow easier access for purchasing catastrophic plans.
- CBO’s new estimate is that it will reduce the deficit $3.8B over 10 years, but will not change the number of people with health insurance; there are no definitive estimations on effect of premium costs.
Children’s Health Insurance Program (CHIP)
As of January, 9 million middle class and poor children across the country covered by CHIP remained in limbo because insurance coverage has not been permanently funded since Sept. 30. Advocates are requesting a 5-year funding extension.
- On Dec. 21 Congress reallocated funds to temporarily keep CHIP from failing, but this money will run out in March.
- 2 million children across several states are at high risk for losing insurance after the temporary patch runs out.
- Alabama, Colorado, Virginia, and Utah have sent notices warning families their coverage could end without Congressional funding. Alabama announced it will end enrollment for children in February.
ACA Enrollment
This year’s open enrollment period for insurance on the federal insurance exchange boasted numbers nearly on par with last year’s, with 8.8 million Americans signing up. The turnout was more robust than expected given the challenges of an insurance enrollment period that was half the time of last year, government funding for marketing and outreach that was slashed by 90%, and constant uncertainty about the state of the ACA over the course of the year.