The U.S. tax system and health care are deeply intertwined. The Republican tax bills hurtling through Congress would make significant changes in this relationship.
The proposed changes, primarily a large cut in the corporate tax rate from 35 to 20 percent, would benefit health care (and most other) companies.
But none of the changes would, in the long run, benefit consumers, the public good, or public health. The major components of the proposed legislation are dangerously ill-conceived and ill-timed in the context of the overall economy and in particular health care policy and spending, which is projected to comprise 20 percent of the nation’s economy in 2025, up from 18.3 percent today.
That’s a difference and increase that reflects several trillion dollars of “additional” health care spending over the next decade. Amid this projected rise, the Trump administration and congressional Republicans propose to reduce the rate of growth of overall federal government spending and shift a sizable portion of health spending to other government entities and programs. These include the Pentagon, national security, homeland security, infrastructure projects, and—most notable in the context of the tax bills—a tax cut for corporations and upper income Americans.
It doesn’t and won’t add up—unless two (unlikely) things happen: (1) the economy grows at twice to three times the rate most economists predict and (2) the rate of growth in health spending is dramatically constrained.
Absent both, the Republican tax bills will cause the annual federal budget deficit and the nation’s long-term debt to balloon even more than already forecast.