As we all know, one of the signature promises made by the Republican-controlled Congress and Administration during the 2016 elections was the goal of implementing tax cuts for all Americans. The House Republicans have already passed their version of a tax proposal, with the Senate poised to debate its version of tax reform yet this week. And while the notion of tax reform is certainly something we can all support, as always, the devil is in the details.
To be sure, both plans being discussed lower the base tax rate for most citizens. But one relatively silent aspect of the current debate actually pits tax reform against health care costs. For example, the House plan would eliminate a decades-old deduction for people with very high medical costs. Currently, those taxpayers with health care expenses above 10 percent of their adjusted gross incomes can deduct those expenses from their taxes. Originally created during World War II, an estimated 8.8 million people claimed this deduction on their 2015 taxes, totaling $87 billion (according to the IRS).
These are relatively small numbers in a $1.5 trillion tax reform proposal, but those who qualify for this exemption generally have very high out-of-pocket health care costs. AARP estimates that about three-quarters of those who claim the medical expense deduction are aged 50 or older and more than 70 percent have incomes of $75,000 or less.
While the Senate plan does not currently include this provision, it does include something the House plan does not—a repeal of the Affordable Care Act’s mandate requiring all individuals to have health insurance. This does save on government spending, because the government doesn’t have to spend as much on premium supports. But it would lead to an estimated 4 million people jumping off the insurance rolls next year, rising to as many as 13 million people by 2027. And some insurance industry analysts predict this will cause health insurance premiums to rise 10 percent more than normal annually for the next 10 years.
Why is all this important? Well, when people can’t afford or simply don’t have health insurance, there’s only one place they can turn to for health care services…the hospital emergency room. Decatur County Hospital, like every other hospital in the state, stands by its mission to provide care to everyone regardless of ability to pay. No other class of health care providers makes that promise. But such care isn’t really “free.” The more those costs increase, the more difficult it will be for hospitals like DCH to hire staff, provide a wide array of services, and meet the overall health care needs of the community.
Once both chambers pass their version of tax reform, the House and Senate will meet to develop a compromise plan. In this moment, we certainly hope our elected leaders reflect on the essential role community hospitals play in the fabric of life across this great nation. It’s a question at least as important as paying a few dollars less each month in taxes.
Greg Boattenhamer, CEO