The U.S. Tax Reform bill may not save you any money, and it will increase the cost of your health insurance

The United States Congress has passed federal tax reform, touted by some as a “Christmas gift” to the middle class. While many may be happy to hear they will realize on average $1,200 in tax savings, at least initially, if all you wanted for Christmas was less expensive healthcare, this “tax reform” is actually a toxic lump of coal..

Any savings Americans believed they would receive will be easily snuffed out by the cost of higher health insurance premiums in the near future.

Federal tax reform will eliminate a key aspect of the Affordable Care Act (ACA) otherwise known as the “Individual Mandate.” Experts advise that eliminating the individual mandate may actually cause health insurance premiums to go up for everyone in the long run. This increase will happen because the ACA is like a “three legged stool,” where the individual mandate is the first leg:

First Leg:  The ACA increases tax revenue by mandating that all American tax payers purchase health insurance (or pay a tax penalty).

Second Leg: The increased tax revenue is used to provide subsidies to healthcare insurers who offer coverage to individuals on the “Exchanges”—so that low income families can afford to buy health insurance coverage.

Third Leg: After increasing the number of Americans with health insurance (and generating more revenue for insurers), the ACA requires those insurers to offer better healthcare coverage, such as eliminating pre-existing condition exclusions, and provide preventive services at no cost to the insured.

The tax reform bill saws off the first leg of the stool, which will topple our nation’s system of healthcare:

1- Individuals who are not facing immediate health issues will stop buying health insurance.

2- Health insurers on the ACA Exchanges will raise premiums to offset the loss of subsidies, which will prevent low-income families from purchasing insurance.

3- 13 million more Americans will become uninsured, which means more people will show up at hospitals in need of extremely expensive medical services, but won’t have insurance to help pay for those costs.

4- Hospitals will begin to raise prices for everyone, to offset the increase in uninsured Americans who don’t pay them for the services they receive.

5- Health insurers will raise insurance premiums for everyone (even those why buy insurance through their employer) in order to pay for higher hospital prices.

The tax reform bill is a wolf in sheep’s clothing. In just a few short months after this bill passes, various insurers on the ACA Exchanges will start imposing massive hikes in premiums, or will withdraw from the Exchanges all together.

There is one smaller glimmer of hope on the horizon. The recent win by Doug Jones, Democratic Senator from Alabama, could be a sign of positive momentum building for Democrats in the months leading up to the 2018 Congressional mid-terms. If the Democrats can gain back a majority in the House of Representatives or the Senate, then we may be able to curb the negative consequences associated with this disastrous tax reform bill.

For more information contact your labor law counsel.

By Adam Thomas | December 21, 2017

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