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4 ways the Republican tax plan could change health care

Proposed tax cuts are bad news for public health.

Paul Ryan and Mitch McConnell Bastiaan Slabbers/NurPhoto via Getty Images
Dylan Scott covers health care for Vox. He has reported on health policy for more than 10 years, writing for Governing magazine, Talking Points Memo and STAT before joining Vox in 2017.

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Who could have guessed that cutting taxes would have public health consequences.

It hasn't gotten nearly as much attention as the other big health care provision in the Senate tax plan — that'd be repealing the Affordable Care Act's individual mandate, which could increase the uninsured rate and lead to higher premiums — but Republicans are also proposing a cut to federal taxes on alcohol.

We have good reason to think that's a bad idea for public health — an issue that could literally be a matter of life and death.

Vox's German Lopez ran through the proposal and its potential consequences yesterday. Republicans want to slash taxes on both beer and distilled spirits, at least through 2019.

German ticked through all the research we've seen showing that higher prices for alcohol mean reduced negative outcomes, including deaths. One study estimated "a 10% price increase would cut the death rate 9-25%. For the US in 2010, this represents 2,000-6,000 averted deaths/year."

As German summarized it:

To put it another way, paying about 50 cents more for a six-pack of Bud Light would probably save thousands of lives every single year.

This is a conservative estimate. It only counts deaths from alcohol-caused diseases. The number of saved lives would be higher if it accounted for alcohol-related deaths due to violence, car crashes, and other problems.

But wait, there's more health care in the tax bill

We also learned yesterday that the Republican tax plan could trigger automatic cuts to Medicare unless Congress intervened.

Vox's Tara Golshan detailed the complicated mechanics:

It all comes down to the "pay-as-you-go," or PAYGO, rule — a 2010 law that says all passed legislation cannot collectively increase the estimated national debt. In other words, if Republicans want to pass a tax cut, they have to pay for it with mandatory spending cuts — or, inversely, if Congress boosts funding for entitlement programs, it has to increase taxes.

If Congress violates this law, the Office of Management and Budget, which keeps the deficit scorecard, "would be required to issue a sequestration order within 15 days of the end of the session of Congress to reduce spending in fiscal year 2018 by the resultant total of $136 billion," the CBO said in a letter to Minority Whip Rep. Steny Hoyer (D-MD).

Republicans like Sen. Pat Toomey (R-PA) are already promising that would never happen. But that was the same promise made about the 2013 sequestration cuts, which ultimately did occur because a later Congress proved unable to come up with an alternative plan.

So you've got reduced alcohol taxes that could lead to more deaths, potentially $25 billion in Medicare cuts ... oh, and also a major piece of Obamacare repeal.

Don't forget about the medical expense deduction

Sarah already explained the deduction's importance for Americans who have high out-of-pocket medical costs. This is an issue to watch going forward as the House and Senate try to reconcile their competing tax bills.

The House would have eliminated the deduction entirely. The Senate wants to keep it. That's a big difference to try to resolve, especially as Republicans strive to hit their deficit targets, where every dollar counts.

Tax overhaul forecast: Take it seriously

With the House vote today, it's time to start taking the Republican tax plans seriously, especially given the health care implications of the package that is coming together.

We only have one defector in the Senate right now: Ron Johnson (R-WI). Two others would need to join him to block the plan.

Susan Collins (R-ME) and Lisa Murkowski (R-AK), the two Senate Republicans most likely to be put off by mixing health care with taxes, don't sound thrilled about the individual mandate's repeal making it into the tax bill. But they aren't threatening to tank it yet either.

The more health care becomes central to the tax reform debate, the riskier it becomes for the Republican plan. We already saw the narrative of health care cuts paying for tax cuts help sink the Obamacare repeal bills this spring and summer.

But so far, Republicans are moving with great speed and successfully warding off the most potent Democratic attacks that could get in their way. Whether they can keep that up for the next month will probably determine whether this tax plan can pass.

Chart of the Day

Alcohol prices and excessive consumption

Community Preventive Services Task Force

Here is some of that convincing evidence that higher prices for alcohol lower consumption. The findings are overwhelming. "Nearly all studies, including those with different study designs, found that there was an inverse relationship between the tax or price of alcohol and indices of excessive drinking or alcohol-related health outcomes," wrote the Community Preventive Services Task Force back in 2010.

Kliff’s Notes

With research help from Caitlin Davis

Today's top news

  • "House passes GOP tax bill, upping pressure on struggling Senate effort": “The House passed its version of the Republican tax overhaul Thursday, notching a key win for President Trump and House Speaker Paul D. Ryan (R-Wis.). But obstacles remain in the Senate, which is refining its own version of the legislation amid objections from key GOP senators.” —Mike DeBonis and Damian Paletta, Washington Post
  • "'Obamacare' mandate repeal would remake market for consumers": “Millions are expected to forgo coverage if Congress repeals the unpopular requirement that Americans get health insurance, gambling that they won't get sick and boosting premiums for others in a sharp break with the idea that everyone should contribute toward health care.” —Ricardo Alonso-Zaldivar, Associated Press
  • "Trump’s Abrupt Policy Shift Fuels Misleading Obamacare Renewal Info": “As health care consumers across the country find themselves with half as much time to enroll, and with far fewer resources for information and assistance, many people across the country are also receiving renewal notices from their insurers showing wildly inaccurate estimates of how much they will have to pay in premiums.” —Alice Ollstein, Talking Points Memo

Analysis and longer reads

  • "What States Can Learn From One Another on Health Care": “States have markedly different populations with varying needs, resources and cultures — and systems that work well in one state may not work well in another. But what do we know about how states use health policy freedom?” —Dhruv Khullar, New York Times
  • "Can Apps Slay The Medical Bill Dragon?": “In their quest to revolutionize an industry, these start-ups face a variety of obstacles, including trouble getting access to medical records and difficulty cracking complex insurance policies. Some of the young companies are flourishing. Others are folding.” —Jocelyn Wiener, Kaiser Health News

"Redesigning hospitals with patient experience in mind": “The idea, as it is in other industries, is not that technology alone will solve the patient (or consumer) experience puzzle, but that technology facilitates care models that improve experience.” —Rachel Z. Arndt, Modern Healthcare

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