Under the camouflage in the tax cut bill
Politicians are masters of legislative camouflage. By this I mean that they are very good at making you think legislation is doing one thing when in reality it accomplishes another goal.
One of the easiest ways to do this is to have different parts of the bill become operational at different times. This is done in the hope that members of the public don’t connect the interaction of two seemingly separate events to one piece of legislation.
Let’s look at the recently passed Republican federal tax reform bill as an example.
Right now feverish efforts are occurring to revise federal tax tables so new withholding calculations from your paycheck go into effect in February or March. Now let’s say you are in the $50,000 to $75,000 tax bracket. According to the Tax Policy Center, you stand to pay on average $870 less federal tax, giving you about a 1.6 percent increase in after-tax income. Isn’t that just great?
But remember, this tax reform bill also eliminates the individual mandate to have health insurance in 2019. If you are inclined to say “So what?”, then you are falling for the legislative camouflage in this bill.
The individual health care insurance mandate was put in the Affordable Care Act (ACA) at the urging of insurers. Why? Remember that any type of insurance only works if enough people participate who won’t need to use the insurance in any year.
Insurers held that if they had to provide coverage for all the sick people in the country with no exclusions for preexisting conditions and limits on what you can charge them, there had to be a mandate to assure that those who think they are healthy bought insurance to spread the risk out over a larger population.
Otherwise people would tend to not want to buy health care insurance until they got sick, which would drive the cost of health care insurance through the roof.
Insurers even held that the proposed ACA tax penalties were too small and too many people would pay the penalty rather than buy insurance. So with the ACA insurance mandate dropped, the Congressional Budget Office (CBO) estimates 4 million people will drop their health care insurance in 2019.
How will this impact that additional $870 in your paycheck?
Well insurers know even though these people who drop their insurance think they are healthy, a number of them will be wrong. They will get seriously ill or have serious accidents. They will go into health care facilities, not be able to pay and go bankrupt. The health care providers won’t get paid for those services and will increase the fees charged to those with insurance to compensate. In preparation for the 2019 health insurance dropouts, the CBO indicates we can expect to see a 10 percent increase in our health care insurance premiums.
In 2016, the average family paid $9,996 for health care insurance. So we are talking a $1,000 increase in your health insurance costs that will more than eat up your $870 tax savings. Families with incomes less than $50,000 will lose big-time.
If your income is $75,000-$100,000/year, then you will come out about $310 ahead after health care costs. So this is the “big, beautiful Christmas present” 77 percent of you received from President Trump courtesy of U.S. Representatives LaHood and Davis. Only those with higher incomes will really benefit from the Republican tax package.
Now many would have a fit if Republicans gave your tax dollars to health care insurers directly. But through the wonders of legislative camouflage they are giving the tax refund to you knowing that you will be giving that money plus some to the insurance industry if you want to keep health care coverage. They also know that many of you will not be able to connect the dots to see what is happening.
So connect the dots. Remember the role of LaHood and Davis in producing this unfair tax package when you vote November 2018.
Dr. Stephen Soltys of Springfield is a retired professor emeritus who still teaches on a volunteer basis at SIU School of Medicine.