Tax Cuts Endanger Health Care

Last year when President Trump and the GOP majority in Congress — with the vote of the Santa Clarita Valley’s representative, Steve Knight — repealed a key part of the Affordable Care Act (ACA) in their massive tax-cut legislation, independent experts at the Congressional Budget Office said it would cause health insurance premiums on the individual market to soar. They were right. Recently, California insurers filed for rate increases on average of 8.7 percent, and Covered California projected that nearly half of that increase was because of the tax bill that eliminated the penalty for not having insurance. That kind of increase would mean a typical family in Los Angeles County buying a mid-range policy would pay $230 more next year.

It could have been worse, but California’s increases are lower than in other states because state policymakers took steps to mitigate the sabotage by the federal government.

The repeal of the requirement to have health insurance means that around 8 million people could lose health coverage including hundreds of thousands of Californians. Knight and his Republican colleagues voted for this policy to help pay for tax cuts mostly benefitting the wealthy and corporations, including health insurance and prescription drug companies. The ACA’s provision to require insurance tries to make sure people don’t wait to get sick before seeking insurance and keeps healthy people in the risk pool, lowering premiums for everyone.

Gutting the insurance requirement means more than $300 billion over the next decade that would have gone to help people afford coverage — either to qualify for Medicaid or subsidies to buy private insurance — is being used to help pay for tax legislation that will give 83 percent of the benefits to the wealthiest 1 percent of Americans.

Corporations make out great under the Trump-GOP-Knight tax law as well. Among the biggest winners are pharmaceutical companies, the same ones that keep jacking up prescription drug prices, a major contributor to outof-control health care costs.

Five of the major American drug firms will together save over $6 billion in taxes this year alone, according to Americans for Tax Fairness. They and five others — the Pharma Big 10 — have been handed a one-time, $76 billion U.S. tax discount on a half-trillion dollars in profits they’ve stashed offshore, mostly in tax havens.

Over a recent three-year span, Big Pharma boosted the price of hundreds of drugs — including household names like Celebrex, Crestor and Januvia — by more than 15 percent annually, 10 or more times the rate of inflation, according to AARP.

Not a single drug company has announced plans to use their huge tax savings to lower prescription prices. Quite the contrary. Pfizer — maker of Lipitor, Lyrica and Zoloft, among many others — is getting a billion-dollar tax cut this year, plus saving over $25 billion on its accumulated offshore profits. Yet it’s raised drug prices three times in the past 18 months, boosting the cost of its top-sellers by around 30 percent since President Trump took office.

California consumer advocates have worked hard to protect state residents from the attacks on their health care launched by Trump and Congress. But some of our congressional members, like Knight, keep voting to take away our health care: last year he voted to repeal the ACA and cut and cap Medi-Cal, which would have thrown up to 5 million Californians off their insurance. To fund a tax cut, he voted for a bill where California would have been disproportionately disadvantaged, and our health care system decimated. Thankfully, there were enough votes in the Senate to stop that disastrous legislation.

But the effort to undermine our health care in Congress continues. Instead of joining in lock-step with party leadership on the efforts to strip health care from his constituents, Knight should protect the patients and public of his state and district. He should help end the overpricing of prescription drugs and take action that offers relief from high insurance premiums, instead of tax relief for the wealthy and corporations.

Anthony E. Wright is executive director of Health Access California, an activist coalition focusing on health care.