National Council for Behavioral Health

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Stephanie Pellitt

Policy and Advocacy Associate

Congress Passes Tax Reform, Repeals ACA Individual Mandate

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This week both the House and Senate passed a revised version of the Tax Cuts and Jobs Act (TCJA), sending tax reform to President Trump’s desk to become law. The TCJA will have major implications for the nation’s health care system through its repeal of the individual mandate and by adding $1.5 trillion to the federal deficit, which will likely limit what Congress will be able to spend on both discretionary and mandatory health programs, such as Medicaid, in the future. The National Council is deeply disturbed by the negative impact that will result from the passage of the Tax Cuts and Jobs Act.

IMPACT ON HEALTH CARE

While the final version of the tax reform bill does not cut safety-net programs like Medicaid, Medicare, and Social Security directly, it greatly reduces the amount of federal revenue needed to fund those programs. Speaker of the House Paul Ryan (R-WI) has said that his next priority after tax reform will be entitlement reform, meaning proposals to cut safety-net programs could arise in the near future.

In addition to high-level federal budget concerns, the National Council has concerns with specific TCJA provisions that will harm community behavioral health organizations and the populations they serve. These concerns include:

  • Reducing Charitable Giving: The TCJA doubles of the standard tax deduction, which is estimated to cause a reduction of $13.1 billion in charitable giving, a critical revenue source for community behavioral health organizations. According to Chuck Ingoglia, Senior Vice President of Public Policy and Practice Improvement for the National Council, the bill will “disrupt the charitable giving National Council members rely on to make up the difference between what they are paid and the cost of services,” and that without this funding stream the nation’s mental health and addiction treatment service providers, “may be forced to eliminate services and staff, in the middle of an opioid addiction epidemic.”
  • Repealing Individual Mandate. The TCJA ends the requirement for individuals to obtain health insurance each year. This move repeals an essential element of the Affordable Care Act that helps lower premiums and fund comprehensive insurance plans. The Congressional Budget Office estimates that repealing the individual mandate will result in 13 million fewer people being insured over ten years. The mandate repeal is scheduled to go into effect in 2019.

One notable positive change in the revised tax bill is the protection of the medical expense deduction, a key source of financial relief for individuals with chronic and costly health conditions. The bill maintains the medical expense deduction at 7.5 percent of gross income and sets it rise to 10 percent beginning in 2020. Earlier versions of the TCJA would have repealed the medical expense deduction altogether, a proposal which the National Council strongly opposed.

Read the National Council’s full statement on the passage of the Tax Cuts and Jobs Act here.