New Data Deliver Good News for Health Care and Bad News for Speaker Ryan’s Tax Reform Plan

By Harry Steina and Alex Powell

Shortly after Congress’ failed attempt to repeal the Affordable Care Act, or ACA, new budget data confirm the sustainability of the federal government’s major health care programs. These budget data also illustrate a major hurdle for the tax reform plan advocated by House Republican leaders. This new information comes from the Congressional Budget Office, or CBO, and it includes updated projections for the cost of federal programs; tax revenue levels; budget deficits; and economic variables such as gross domestic product, or GDP.

The projected costs of federal health care programs have fallen dramatically since the passage of the ACA. Despite false claims to the contrary, federal health programs are not facing a “death spiral” of exploding costs. The United States has more than enough economic capacity to continue to sustain these programs in the future; repealing the ACA would have instead used American economic capacity to cut taxes for the wealthy.

The ACA included significant reforms to slow the growth of Medicare spending, and overall cost growth in the health care system has also declined in recent years. As a result, over the 10 years from 2018 to 2027, Medicare spending is projected to be roughly $2.3 trillion lower than the CBO initially estimated in 2009, before the ACA’s passage. Due to the lower anticipated cost growth in the long term, savings are projected to grow even larger in future years.

The ACA increased health insurance coverage through a variety of means, including expanding Medicaid access and creating health insurance exchanges where individuals could purchase subsidized health insurance. The latest CBO estimates show that spending on Medicaid and the Children’s Health Insurance Program, or CHIP, along with the ACA health insurance subsidies, is actually projected to be lower than anticipated in the estimates the CBO published in 2010, shortly after passage of the ACA. Some of this is due to lower enrollment due to unanticipated events such as the U.S. Supreme Court allowing states to opt out of Medicaid expansion. But it is also due to lower costs per enrollee in Medicaid, CHIP, and the nongroup market, compared with what the Centers for Medicare & Medicaid Services projected in 2010. From 2018 to 2027, the CBO projects that spending on these programs will be $1.4 trillion lower than it initially projected in 2010.

So with federal health care programs costing less than expected, why did President Donald Trump and Congress try rushing to repeal the ACA? They were looking ahead to tax reform, and repealing the ACA would make it easier to cut taxes for the wealthiest Americans as much as possible—by paying for these tax cuts with cuts to health insurance coverage.

Speaker of the House Paul Ryan (R-WI) lamented that the failure of ACA repeal makes his tax reform plans more difficult. Repealing the taxes in the ACA is a major cost in the House Republican “A Better Way” tax reform plan—a plan that gives the highest-earning 1 percent of households 99.6 percent of the tax cuts in 2025. If Congress wants to pass tax reform using the budget reconciliation process, which can be done with a simple majority in the Senate instead of 60 votes, then tax reform cannot increase long-term deficits. If Congress had successfully repealed the ACA, then the revenue baseline in the CBO’s new long-term budget outlook would be significantly lower. This means that Congress could pass a tax reform bill that raises far less revenue—which means more tax cuts for the wealthiest Americans—because this tax reform bill would be measured next to a lower baseline.

Lowering the revenue baseline in the CBO’s long-term budget outlook would hide the fact that the United States has more than enough economic capacity to sustain Medicare, Medicaid, CHIP, and the ACA, along with other vital programs for low- and middle-income Americans such as Social Security. The CBO’s long-term budget outlook shows the national debt increasing over time, and one reason is rising costs for federal health care programs. But as shown above, federal health care spending is now projected to increase by less than the CBO projected during the time that the ACA was debated and enacted. The CBO’s new report also says that the debt could be stabilized as a share of GDP with policy changes that reduce annual budget deficits by 1.9 percent of GDP.

The United States is currently the fifth-lowest-taxed country out of the 35 advanced economies ranked by the International Monetary Fund, or IMF. If the United States stabilized its national debt as a share of GDP with only tax increases, it would still be the sixth-lowest-taxed country on that list. This tax increase could be smaller if combined with spending cuts, but there is no need to dismantle programs such as Medicare, Medicaid, or the ACA.

During the House’s consideration of the American Health Care Act, which would have repealed the ACA, analysis from the CBO was vital for understanding how the bill would lead to higher costs, less coverage, and tax cuts for the wealthy. With its new long-term budget outlook, the CBO has once again provided vital information for the health care and tax reform debates.

Some politicians still want to repeal the ACA, make huge cuts to Medicaid, and turn Medicare into a voucher program—claiming that doing so is necessary to avert a “fiscal crisis.” Those politicians are certainly entitled to their own opinion, but they are not entitled to their own facts. Federal health care programs now cost less than previously projected, and the savings grow larger over time. There is no fiscal requirement to dismantle federal health care programs, but some politicians may claim otherwise to smooth the way for larger tax cuts for the wealthiest Americans.


Reposted from the Center for American Progress.

Posted In: Allied Approaches

Union Matters

Get to Know AFL-CIO's Affiliates: National Association of Letter Carriers

From the AFL-CIO

Next up in our series that takes a deeper look at each of our affiliates is the National Association of Letter Carriers.

Name of Union: National Association of Letter Carriers (NALC)

Mission: To unite fraternally all city letter carriers employed by the U.S. Postal Service for their mutual benefit; to obtain and secure rights as employees of the USPS and to strive at all times to promote the safety and the welfare of every member; to strive for the constant improvement of the Postal Service; and for other purposes. NALC is a single-craft union and is the sole collective-bargaining agent for city letter carriers.

Current Leadership of Union: Fredric V. Rolando serves as president of NALC, after being sworn in as the union's 18th president in 2009. Rolando began his career as a letter carrier in 1978 in South Miami before moving to Sarasota in 1984. He was elected president of Branch 2148 in 1988 and served in that role until 1999. In the ensuing years, he worked in various roles for NALC before winning his election as a national officer in 2002, when he was elected director of city delivery. In 2006, he won election as executive vice president. Rolando was re-elected as NALC president in 2010, 2014 and 2018.

Brian Renfroe serves as executive vice president, Lew Drass as vice president, Nicole Rhine as secretary-treasurer, Paul Barner as assistant secretary-treasurer, Christopher Jackson as director of city delivery, Manuel L. Peralta Jr. as director of safety and health, Dan Toth as director of retired members, Stephanie Stewart as director of the Health Benefit Plan and James W. “Jim” Yates as director of life insurance.

Number of Members: 291,000 active and retired letter carriers.

Members Work As: City letter carriers.

Industries Represented: The United States Postal Service.

History: In 1794, the first letter carriers were appointed by Congress as the implementation of the new U.S. Constitution was being put into effect. By the time of the Civil War, free delivery of city mail was established and letter carriers successfully concluded a campaign for the eight-hour workday in 1888. The next year, letter carriers came together in Milwaukee and the National Association of Letter Carriers was formed.

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There is Dignity in All Work

There is Dignity in All Work