GOP tax plan could have harmful side effects for health consumers, Midwest health providers

There's an error of omission in the shorthand references to the Republican tax plan barreling through Congress. It should be known as the GOP's "tax and health plan," because the party's sweeping proposals call for a harmful change to the Affordable Care Act and could trigger a troubling funding cut to Medicare, which covers 55 million elderly and disabled Americans.

Voters in Minnesota and elsewhere need to understand the implications of these under-the-radar changes as they weigh the legislative overhauls in the U.S. House and Senate. There's more to this than what deductions and exemptions have been eliminated. The ACA changes could increase consumers' health insurance costs or leave them going without coverage. The Medicare changes could threaten the economic vitality of hospitals and clinics — who are often large employers, particularly in rural areas.

"For most hospitals in Minnesota, Medicare is the largest single source of revenue,'' said the Minnesota Hospital Association in a statement on Friday. The cuts that would result from the GOP reforms' passage "would harm hospitals, health systems and health care in our state."

The House's tax-and-health bill cleared a floor vote on Thursday, with all three of Minnesota's Republican representatives voting for it. The Senate's version cleared a key committee late Thursday night, propelling the measure closer to a floor vote. If the bill passes the Senate, the two chambers will work out differences and likely vote on the finalized legislation before the year's end.

One key difference between the two versions involves the Affordable Care Act's requirement to have health insurance, also known as the individual mandate. The House plan leaves the mandate intact, but reports this week indicate that Senate Republicans plan to repeal it as part of their legislation.

The Congressional Budget Office (CBO) has weighed in on the mandate's repeal. Its conclusions caution against repeal. The CBO estimates that repeal would cause 10 percent annual premium increases over the next decade for those who buy their health insurance on their own instead of getting it through employers or public programs. The CBO also estimated that repealing the mandate will result in 13 million fewer Americans having health insurance in 2027.

A helpful new analysis released this week breaks down the state-by-state impact of repealing the mandate. It would mean 227,000 fewer Minnesotans with coverage in the next decade, according to the Center for American Progress, a left-leaning Washington, D.C.-based think tank. Surrounding states would also see thousands more people without health insurance. There would be 216,000 fewer Wisconsin residents who are covered. To the south, 126,000 fewer Iowans would have coverage.

The analysis also breaks down how much Medicare funding each state would lose in 2018. The sums are alarming, given how reliant the region's medical centers are on Medicare revenue. Minnesota would lose $379 million in 2018. Wisconsin's loss is greater at $423 million. Iowa's comes in at $225 million.

The cuts likely would translate as reduced reimbursement to health care providers serving Medicare patients. Rural providers, who already saw Medicare cuts imposed in 2011, already have thin margins, the Minnesota Hospital Association said Friday. Further cuts further threaten their sustainability. "In 2015, 38 Minnesota hospitals, or 29 percent of hospitals statewide, had negative operating margins. The vast majority of these hospitals are in rural areas,'' the association warned.

Health care is a critical economic engine powering Minnesota and surrounding states. The harmful impact that congressional tax-and-health plans will have on this industry has gotten short shrift in the political debate. A dose of clarity is sorely needed.