ACA Repeal Could Cost at Least $594 Billion: Joint Tax Panel
Repealing the tax provisions funding the Affordable Care Act will cost the government at least $593.7 billion over the next decade, according to the Joint Committee on Taxation.
That figure doesn’t include the revenue loss from several provisions, including funds tied to repealing the individual and employer mandates to buy health coverage. Those revenue scores will come from the Congressional Budget Office, which hasn’t yet released those numbers or the cost of the House Republican plan to replace the health care law. The House Ways and Means and Energy and Commerce committees are scheduled to mark up the replacement legislation March 8.
Democrats are criticizing House leadership for going ahead with legislation without knowing how much it will cost. Minority Leader Nancy Pelosi (D-Calif.) said in March 7 statement, “Members must not be asked to vote on this legislation before the CBO and the Joint Committee on Taxation have answered the following questions about your legislation in 2018 and 2019, over the 10-year budget window, and in the decade after: How will this bill measure up to the Affordable Care Act and current Medicaid law on coverage, quality, and cost? And how will it impact Medicare solvency?”
Repealing the net investment income tax (NIIT), which will cost $157.6 billion, is one the largest revenue losers in the plan to repeal the health care law. The 3.8 percent tax on investment income for wealthy individuals has raised more money than the JCT originally expected.
Some of the revenue losses from the tax’s repeal are less than previous projections about what the tax would raise. Original JCT scores of the tax, from 2010 (JCX-17-10), grouped the figures with the 0.9 percent additional Medicare tax for high earners.
The 2010 scores projected that those two taxes would raise $38.5 billion in 2019, but the repeal scores show that the loss to the government would be only $17.6 billion that year. Not until 2025 would the loss reach roughly $38.2 billion..
Estimates that come in lower than some previous projections are advantageous to Republicans, as they seek to limit the amount of revenue they need to raise to offset the loss from repealing the taxes funding Obamacare.
The JCT broke out the estimates for the repeal of the tax provisions into several documents: the deduction for highly paid employees (JCX-6-17), the tanning tax (JCX-8-17), the fee on insurance providers and branded pharmaceuticals (JCX-10-17), the net investment income tax (JCX-12-17), and several other provisions including the medical device tax and the “Cadillac tax” on high-cost health plans (JCX-16-17).
W&M Approves GOP Health Care Bill; Changes Expected
Lawmakers in the Senate and House expect more changes to be made to legislation that would replace the Affordable Care Act and repeal many of its taxes.
The American Health Care Act, approved by the House Ways and Means and Energy and Commerce committees March 9 on Republican-only yes votes, nevertheless has drawn significant criticism from a number of Republicans on both sides of Capitol Hill. Some of those lawmakers protest creation of what they view as a new entitlement program through advanceable, refundable tax credits to buy health insurance and failure to fully repeal all of the ACA’s taxes.
Senators will have many opportunities to make changes to the House-proposed plan, Majority Leader Mitch McConnell (R-Ky.) said at a Politico event on March 9
Despite criticism of the package by Republicans, McConnell spoke positively of the process beginning to play out.
“This week the House unveiled its bill to repeal and replace Obamacare and begin consideration through the committee process,” he said later in the day on the Senate floor. “It’s an important step toward keeping our promise to the American people, and it not only repeals and replaces Obamacare, it includes the most significant entitlement reform in a generation and provides needed tax relief to American families as well as health care consumers.”
Across the Capitol, House Ways and Means Committee Chairman Kevin Brady (R-Texas) told reporters that Republicans are “delivering for President Trump on his health care plan.”
Ways and Means approved its language in a 23-16 vote along party lines, rejecting Democratic calls to postpone the markup. Energy and Commerce then cleared its health care bill by a vote of 31-23 after a 27-hour session that saw tempers flare as Democrats on that panel tried to delay the legislation.
The House Budget Committee will blend the two committee bills, and that legislation will go through the Rules Committee process before heading to the House floor for a vote.
If the measure clears the House, it will move to the Senate for approval. Since lawmakers are using the budget reconciliation process to pass the measure without risking a Senate filibuster—reconciliation bills can avoid filibusters—the bill must be careful to fall within what lawmakers call the Byrd Rule. That convention requires that all measures passed through reconciliation must relate to revenue or spending. Two items at risk could be the 30 percent premium hike paid to insurers by individuals who go without health care for at least two months and a rule collapsing the number of age brackets from five to three.
“We’ve been taking advice and guidance from our Senate Republican colleagues on this,” Brady said. “That shaped our decision making on those two issues.”
Ways and Means leaders broke their committee’s markup into five parts, covering several provisions including an increase in the executive compensation tax deduction for insurers, the elimination of a 3.8 percent tax on investments for taxpayers in high-income brackets and the repeal of a 0.9 percent additional Medicare tax for high earners.
The two latter changes combined would cost the government nearly $275 billion over 10 years, based on Joint Committee on Taxation (JCT) estimates. According to Rep. Sander Levin (D-Mich.), the 400 highest-income households in the U.S. would reap 80 percent of that tax break.
Democratic lawmakers at the markup categorized the health care bill as a “windfall tax break for millionaires.”
They viewed the bill’s repeal of an annual fee on businesses that manufacture and import branded prescription drugs as a giveaway to “Big Pharma.” Eliminating the fee runs afoul of President Donald Trump’s promise to crack down on the drug industry, which he has said is “getting away with murder,” Rep. Lloyd Doggett (D-Texas) said.
Rep. David Schweikert (R-Ariz.) said repealing the fee—essentially an excise tax—would result in lower drug prices for consumers. Thomas A. Barthold, the JCT’s chief of staff, said that would be the predicted response from an economics standpoint, but he added that market outcomes aren’t guaranteed. Rep. Mike Thompson (D-Calif.) suggested that a measure be added to the bill to ensure that the estimated $24.8 billion tax break over 10 years actually passes to consumers.
Democrats scolded Republicans for not giving committee members enough time to digest the health care replacement and said that voting on the bill before getting a score from the Congressional Budget Office was irresponsible. The CBO score, expected at the beginning of next week, will calculate the cost of the bill and estimate how many Americans would lose coverage. Approving a bill without having those facts is like “making decisions in the dark,” said Rep. Judy Chu (D-Calif.). “This is not right.”
House Lawmakers Look to Freeze Medicaid Expansion by 2018
A trio of influential House Republicans is pushing to freeze the Affordable Care Act’s Medicaid expansion funding by 2018, two years earlier than Republican leaders previously proposed.
The change could win over a key voting bloc of conservatives in the House but is opposed by moderates, who warned March 9 that senators from the 31 states that expanded their health insurance programs for the poor are likely to oppose it, too.
Rep. Joe Barton (R-Texas) told reporters March 9 he plans to introduce an amendment to the House Republicans’ ACA repeal bill that would close the window for states to earn a greater share of federal dollars for expanding their Medicaid programs at the end of 2017.
Barton and other lawmakers first offered, then withdrew the amendment during a markup of the repeal bill by the House Energy and Commerce Committee March 9 at the behest of the panel’s chairman, Rep. Greg Walden (R-Ore.).
“I promised the chairman I would be supportive of the bill at committee and he didn’t have time to get it scored,” Barton said.
House Speaker Paul Ryan (R-Wis.) said changes will need to be made in the Affordable Care Act repeal emerging from two House committees, but he expected those changes to be small.
At his weekly televised briefing with reporters March 9, Ryan said he expected some changes to be made in response to a budget impact score from the nonpartisan Congressional Budget Office, which isn’t expected until early in the March 13 week.
“When we get our score, I’m sure we’ll probably have to make some tweaks and adjustments. That happens every time we do reconciliation,” Ryan said, referring to the fast-track budget process Republicans are using to make the bill filibuster-proof in the Senate.
Ryan said the bill will also go through two more committees before a vote on the House floor, the House Budget Committee and the House Rules Committee.
“The bill will be out there for three weeks, to be looked at,” he said. The Energy and Commerce Committee as well as the Ways and Means Committee marked up the bill March 8 and March 9.
The change to freeze expansion funding by 2018 could save the government more than $100 billion over six years, Barton said. However, that’s money that would’ve gone into state Medicaid programs to give poor people insurance. Also, tax credits to help people purchase insurance don’t start until 2020 under Republicans’ repeal bill, meaning poor Americans who fall off of Medicaid due to the freeze would get no assistance from the federal government for as long as two years.
Giving states three years to continue growing their Medicaid rolls was a compromise between lawmakers from states that chose to take the added federal dollars and those that rejected the money, Rep. Michael Burgess (R-Texas), chairman of the House Energy and Commerce health subcommittee, told reporters March 9.
“We’re at the cusp of doing major entitlement reform, the likes of which hasn’t happened since Medicaid was first created; you can’t get there without solving the problem between expansion and nonexpansion states,” Burgess said.
Barton, the vice chairman of the Energy and Commerce Committee, and Rep. Marsha Blackburn (R-Tenn.), who served on President Donald Trump’s transition team, told reporters they plan to offer the amendment along with one to establish work requirements for Medicaid beneficiaries at a Rules Committee hearing that must take place before the full House considers the health-care measure. They’re joined by Rep. Richard Hudson (R-N.C.) in originally introducing the amendments.
This change is supported by the Republican Study Committee, the largest voting bloc among House conservatives with more than 150 members who opposed a previous version of the ACA repeal bill. Members of the House Freedom Caucus were similarly supportive of the change.
However, Rep. Charlie Dent (R-Pa.), chairman of the moderate House caucus the Tuesday Group, said March 9 that freezing Medicaid funds earlier will prove unpopular among lawmakers like him, who represent expansion states. He said the change could garner support from hardliners in the House, but would hurt the legislation’s chances in the Senate.
“It’s going to be a big problem,” Dent said.
John Zang Contributed To This Report