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Tax Cut Proposal Seen as Endangering Access to Care

Tony Hagen @oncobiz
Published: Friday, Nov 17, 2017

Oncology providers contend that the sweeping $1.5 trillion in tax cuts sought by Republicans would trigger sequester cuts that would drive more independent practices out of business and reduce patient access to care.

In statements, they noted that the Congressional Budget Office (CBO) has warned that the tax cut proposal, which passed narrowly in the House on Thursday, would require $136 billion in federal spending reductions next year, $25 billion of which would come from Medicare spending.

The spending reductions would come in the form of automatic sequester cuts designed to prevent the federal government from running out of money.

“Policymakers in Washington should note that blunt budget-cutting gimmicks like the sequester cut backfire. They have terrible unintended consequences and do more harm than good for patients and taxpayers,” the Community Oncology Alliance (COA) said in a statement. The coalition of independent oncology practices stated that, according to one study, the most recent Medicare sequester cut, 5 years ago, resulted in the closure of 91 oncology practices—many consisting of multiple clinic locations—and caused another 130 to merge with hospitals in order to survive.

Republicans have argued that the broad tax cut plan would put money into the pockets of Americans, especially struggling families that are having difficulty paying their bills and don’t have much saved for the future. They contend that the huge corporate tax reduction would stem the exodus of US companies that have relocated their headquarters overseas in order to benefit from lower tax rates in other countries, costing America good-paying jobs and making it less competitive. Further, they contend, the US economy has grown at a sluggish pace even though the Dow Jones Industrial Average has soared roughly 4,600 points this year.

The prior sequester cut reduced the Medicare payments doctors receive to cover costs of drug storage and management and various other services. The anticipated Medicare cut resulting from the current tax bill would cause a significant further reduction in those payments, COA stated.

The House bill passed with a 227-to-205 vote. Thirteen Republicans joined Democrats in opposing the measure. The Senate version, to be voted on next Thursday, is somewhat different, as it makes individual tax cuts temporary and delays implementation of a steep corporate tax reduction, from 35% to 20%, by 1 year. Observers speculated that with a slimmer Republican majority in the Senate, passage there would be more difficult.

In a letter to members of the Senate Finance Committee and the House Ways and Means Committee, various oncology provider groups and advocacy organizations for patients with cancer expressed concerns about the potential negative impacts of the tax reform proposal. The tax bill as proposed by House Republicans would eliminate an expense deduction for people with very high medical bills. It would keep the individual mandate of the Affordable Care Act, but the Senate version would scrap it.

If the final version does away with the individual mandate, healthy individuals would be released from their obligation to carry health insurance. This is expected to increase the concentration of sicker people in health plans and prompt payers to raise their premiums, adding to the expense and instability of the health exchange system established by the Obama administration. “The protection against pre-existing condition limits and exclusions [from coverage] is of critical importance for cancer patients. An insurance system without those protections is an insurance system that typically excludes cancer patients from coverage or places severe limits on their access to coverage,” the providers and advocacy groups wrote in the letter. Those signatories included ASCO, the Hematology/Oncology Pharmacy Association, CancerCare, and Susan G. Komen. The group issued the statement under the collective moniker Cancer Leadership Council.

In an analysis of the Republican tax reduction proposal, the CBO stated that the $1.5 trillion in tax cuts would result in an equivalent amount of deficits between 2018 and 2027 that would need to be offset by spending reductions. Those automatic cuts were established by the Pay-As-You-Go Act (PAYGO) of 2010.

The CBO stated that the Office of Management and Budget (OMB), which keeps track of deficits and has the power to impost spending reductions, “would be required to issue a sequestration order within 15 days of the end of the session of Congress to reduce spending in fiscal year 2018 by…$136 billion.”

However, the CBO stated that much federal spending is beyond the reach of the OMB, such as low-income programs and Social Security, which are exempt from sequester cuts.

“Given that the required reduction in spending exceeds the estimated amount of available resources in each year over the next 10 years, in the absence of further legislation, OMB would be unable to implement the full extent of outlay reductions required by the PAYGO law,” the CBO said.

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Community Practice Connections™: Bridging the Gaps Around Oncology Biosimilars: Assessing the Potential Impact of Emerging Agents to PracticeSep 29, 20181.5
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