Is Tax Reform Fatal?

 

Can a tax reform plan be fatal? Sounds preposterous – but not for some opponents of the new Republican tax reform bill.

John C. Goodman, economist writing in Forbes, says, “You know you are in the silly season when the charges against sensible tax reform become more and more outrageous. The silliest and most outrageous is based on this causal reasoning: The Republican tax measure repeals the ObamaCare mandate, requiring people to purchase health insurance; without the mandate, fewer people will insure; and without insurance, more people will die.”

Who would be so foolish to say such things? None other than ObamaCare architect Jonathan Gruber and former Treasury Secretary Lawrence Summers. Summers has recently been criticized by other economists for ignoring his own past writings in attacking tax reform. Gruber is the same guy who once said, Lack of transparency is a huge political advantage.”

The clear message of these two liberal economists is that the government knows what’s best for you and should compel you to follow their advice.

Gruber is actually the one who convinced President Obama that an Individual Mandate was necessary to make his new healthcare law work. Obama had spoken against such a mandate in the 2008 presidential campaign.

Gruber was heralded by the liberal media including The New York Times’ Catherine Rampell who wrote this in 2012:

“Mr. Gruber has spent decades modeling the intricacies of the health care ecosystem, which involves making predictions about how new laws will play out based on past experience and economic theory. It is his research that convinced the Obama administration that health care reform could not work without requiring everyone to buy insurance.”

 

Gruber and Summers are relying on a study done by Sommers, Long and Baicker. They looked at mortality in 19 counties in Massachusetts and 513 statistically similar counties in other states four years before and after Massachusetts imposed an individual health insurance mandate in 2006. That study concluded that increased Massachusetts health coverage reduced mortality by 8.2 deaths per 100,000 people between ages 20 and 64. Sommers et al. interpreted the results to mean that expanding health insurance nationwide would prevent one death per year for every 830 people newly insured.

Goodman says if Gruber and Summers are right, then the estimated 20 million Americans who gained health insurance under ObamaCare should prove their point. If true, and if people in the rest of the country are like people in Massachusetts, deaths for people ages 20 to 64 should have fallen by roughly 24,000 a year. But the sad truth is that crude death rates for the people in that group rose from 341.2 per 100,000 in 2011 to 352.6 in 2015. They even rose in Massachusetts!

While this is not proof Gruber and Summers are wrong, it should make discerning minds very skeptical of their claims. Most people in the age group 20 to 64 are relatively healthy and their deaths are often attributable to accidents, suicide, and homicide. In 2006, the year of the Sommers et al. study, deaths from accidents were 11.9%, suicides 4.3%, and homicides 2.3% of total deaths.

From 2006 to 2010, the age-adjusted death rate from accidents fell 17 percent in Massachusetts for people in the same age group. Victims who require emergency treatment cannot be denied care in U.S. hospitals for lack of health insurance. A lower accident rate alone would lead us to expect a lower mortality rate in Massachusetts relative to the rest of the country regardless of who has health insurance.

The truth is that health insurance has little or no effect on mortality rates. The issue has been studied by former Congressional Budget Office director June O’Neill, former Agency for Healthcare Research and Quality director Richard Kronick, and Berkeley professor David Card. They concluded that any mortality effects of coverage are small. The Oregon Medicaid Experiment, which began in 2007, continues to find little or no impact of health insurance on medical outcomes. The uninsured have fared no worse than those with health insurance, at least those on Medicaid.

As Democrats like Gruber and Summers see their previous accomplishments like ObamaCare come to ruins, it’s little surprise that they try to defend their work. But it’s inexcusable to make bogus claims that bear no resemblance to reality just to try to score political points.

One last point that needs to be emphasized since Democrats and the media continue to repeat a false narrative: The repeal of the Individual Mandate will not cause, force, or trigger anyone to lose health insurance. It will only eliminate the tax penalty for those who choose not to purchase health insurance. Everyone can still purchase health insurance with the same subsidies that were previously available.

One comment

  1. As usual, Dr. Roberts hits the nail on the head with this blog. Clearly stated and factually based, this blog assesses the new tax reduction plan that recently passed the Congress.

    Comment by David R. Godfrey on January 8, 2018 at 2:35 pm