Who Knew Tax Reform Impacted Mental Health?


Congress is currently considering tax reform bills. The House could vote on its tax bill as early as today, Nov. 15, while the Senate is expected to vote the week after Thanksgiving.

While NAMI does not take a position on overall tax reform efforts, we do take positions on provisions in tax bills that would negatively impact people with mental illness and the efforts of NAMI State Organizations and NAMI Affiliates.

How Tax Reform Impacts People with Mental Illness

Tax reform should not hurt people with mental illness. Current proposals would do just that. Here’s how:

  • Increasing the cost of health insurance. Yesterday, the Senate announced that they will include an effective repeal of the Affordable Care Act’s individual mandate in their tax bill by eliminating the penalty for not having health insurance. The non-partisan Congressional Budget Office (CBO) estimates this would increase the number of uninsured Americans by 4 million people in 2019 and an estimated 13 million by 2027. With fewer healthy people insured, premiums will increase—making insurance less affordable for people with mental health conditions.
  • Ending the tax deduction for medical expenses. The House bill includes a repeal of the medical expense deduction, which allows people who spend at least 10% of their income on medical expenses to deduct those costs from their taxes. Eligible deductions can include payments for:
    • Visits with psychiatrists, psychologists or therapists
    • Inpatient psychiatric and substance use stays
    • Transportation to mental health treatment
    • Mental health medications

Repealing this deduction will harm people with serious mental illness who can least afford it—and may even lead to people going without treatment.

  • Reducing incentives that increase the supply of affordable housing. Too many people with mental illness lack affordable housing. The House bill will hurt, not help. Repeal of the tax exemption on private activity bonds (PABs) coupled with reductions in the corporate tax rate will stifle housing development and result in an estimated 950,000 fewer units of affordable rental housing, according to the National Housing Trust. This will cause even greater challenges for people with serious mental illness who rely on the Section 811 program for housing.

While neither tax bill touches Medicaid, it is estimated that the current proposals could add as much as $1.5 trillion to the deficit. To pay for the tax cuts and reduce the deficit, Congress may propose to cut Medicaid and other services soon.

How Tax Reform Impacts NAMI

Other tax reform provisions that are expected to affect charitable giving could impact NAMI State Organizations and NAMI Affiliates, as well. The most important proposed change is a substantial increase in the standard deduction on income taxes. If passed, this is expected to significantly reduce the number of people who itemize deductions, including charitable deductions. Many groups, including the nonpartisan Joint Committee on Taxation, suggest that this may dramatically reduce Americans’ charitable giving to nonprofits, such as NAMI organizations.