Protect Health Care in Tax Reform Bill, Coalition Cautions

December 12, 2017 05:35 pm News Staff

The AAFP and five other physician organizations are warning Congress that tax reform legislation under consideration could drastically reduce access to health care even as it increases costs for patients and medical students.  

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The coalition, which represents 560,000 physicians and medical students, expressed strong reservations about specific elements of the legislation in a Dec. 12 letter(3 page PDF) to House and Senate leaders from both parties, noting that provisions in the bills would harm public health.

The House and Senate have passed separate tax reform bills, and legislators are working to reconcile the two measures. The letter -- signed by the AAFP, as well as the American Academy of Pediatrics, American College of Physicians, American Congress of Obstetricians and Gynecologists, American Osteopathic Association, and American Psychiatric Association -- highlights key points that legislators should focus on fixing and offers suggestions for doing so.

"We express our increasing alarm regarding tax reform legislation as passed by the House and Senate and caution that the impact of these policies will be harmful to Americans and our health care system," the letter stated.

Medicare Cuts

In blunt language, the organizations warned that Medicare cuts should not be used to finance any part of tax reform.

Without legislation to protect Medicare, "pay as you go" budget requirements could force a 4 percent cut in physician payments, which could affect payment from other insurers that use Medicare as a benchmark. These cuts could increase each year and reach as high as 7 percent. This situation bears a striking resemblance to the Medicare sustainable growth rate formula that threatened physician payment cuts every year until it was eliminated by the Medicare Access and CHIP Reauthorization Act of 2015, the organizations pointed out.

"These cuts could have a disproportionate and adverse effect on the primary care and other front-line physicians represented by our organizations, whose services are already undervalued by Medicare," the letter stated.

The cuts also could force physicians to limit the number of Medicare patients they treat to keep their practices viable.

Individual Mandate

Another alarming measure in the bill would end the requirement for individuals to have health insurance. The Congressional Budget Office has said this move would lead to 13 million people becoming uninsured within the decade and increase premiums by 10 percent annually, and could drive many insurers out of their markets. In such a climate, many people would postpone buying insurance until they were sick.

"Without enough healthy people in the insurance pools to subsidize less healthy ones, premiums will have to go up substantially for everyone, if insurers continue to sell insurance at all," the letter stated.

Medical Expense Deduction

Current law allows individuals to deduct medical expenses from their taxes, but those who do so will carry a heavier financial burden under the proposed legislation. The House bill would repeal the deduction for medical expenses entirely. The organizations urged legislators to adopt the Senate bill's medical expenses provision instead, which would reduce the deduction from 10 percent to 7.5 percent.

The letter warned that even reducing the deduction for medical expenses "both harms those with debilitating sickness and compounds Medicaid costs."

Student Loan Interest and Tuition Waivers

The House bill also could subject medical students to significantly higher expenses by eliminating a deduction for student loans and tuition waivers. The Senate bill would continue to allow medical students to pursue advanced degrees or work as teaching assistants without reporting tuition waivers as income.

The letter highlights the importance of maintaining the current deductions.

"As our country is facing a shortage of hundreds of thousands of physicians in many fields, we should be encouraging more students to pursue careers in medicine, not making medical education more expensive," the letter stated.