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McConnell Delays Vote on ACA Repeal Measure

Posted on June 28, 2017 by Dylan F. Moroses

Senate Republican leadership on June 27 postponed an expected vote on a bill to repeal and replace the Affordable Care Act, with Majority Leader Mitch McConnell, R-Ky., citing disagreement within his conference.

“We’re still working toward getting at least 50 people in a comfortable place,” McConnell told reporters at his weekly press briefing. A vote on the bill had been expected by the end of the week, but following the postponement, any vote will have to occur after Congress returns from its weeklong Independence Day recess.

McConnell emphasized that the ACA repeal effort isn’t over. “I remember how challenging it was for the Democrats when they were enacting [the ACA] back in 2009 and 2010,” he said. “It’s a big, complicated subject. We’ve got a lot of discussions going on, and we’re still optimistic we’re going to get there.”

The Better Care Reconciliation Act of 2017, a substitute amendment to the House-passed American Health Care Act (H.R. 1628), would cut ACA taxes by $100 billion less than the House measure, according to the latest Joint Committee on Taxation estimates (JCX-30-17). Compared with current law, it would also likely result in 22 million additional individuals uninsured by 2026, 1 million fewer than the AHCA, according to the Congressional Budget Office. One of the most significant tax differences between the House and Senate bills concerns proposed reductions in the adjusted gross income floor for the itemized deduction for medical expenses, to 5.8 percent and 7.5 percent, respectively, down from the 10 percent enacted under the ACA. The 1.7 percentage point difference between the bills amounts to an additional $89.6 billion over 10 years.

Differences in 10-Year Revenue Estimates of Tax Provisions 

In House Bill (Passed May 4) and Senate Draft (as of June 26)

Sources: see below.

 

HOUSE

SENATE

Change

 

HOUSE

SENATE

$ Bil.

$ Bil.

Section

Section

TOTAL CHANGE IN DIRECT SPENDING (reduction in deficit from spending cuts)

-1,111.1

-1,021.9

89.2

Comments:

  • Senate cuts spending less (i.e. spends more)

  • Senate cuts taxes less (i.e. taxes more)

  • On net Senate reduces deficit more

  • Biggest tax difference is Senate less generous in restoration of medical deduction

TOTAL CHANGE IN REVENUES (increase in deficit from tax cuts)

-992.4

-701

291.4

NET DECREASE IN DEFICIT

-118.7

-320.9

-202.2

COVERAGE PROVISIONS

-331.6

-137.9

193.7

Includes Repeal of Individual Mandate, Repeal of Employer Mandate, Repeal of Small Business Tax Credit, Changes to Refundable Credit for Health Insurance Coverage, Changes to Recapture Excess Advance Payments of Premium Tax Credits

 

 

 

NONCOVERAGE PROVISIONS

-662.6

-569.4

93.2

Delay of Tax on Excess Employee Health Insurance Premiums ("Cadillac Tax")

-66

-66

0

206

108

Repeal of Exclusion of Over-the-Counter Medications from Qualification for HSAs

-5.6

-5.6

0

207

109

Repeal of Increase in Tax on Distributions from HSAs

-0.1

-0.1

0

208

110

Repeal of Limitations on Contributions to Flexible Spending Arrangements

-19.4

-18.6

0.8

209

111

Repeal of 2.3% Medical Device Excise Tax

-19.6

-19.6

0

210

113

Reinstate Deductions for Expenses Allocable to Medicare Part D Subsidy

-1.8

-1.8

0

211

115

Reduce 10% AGI Floor for Itemized Medical Care Deduction (to 5.8% House; to 7.5% Senate)

-125.7

-36.1

89.6

212

116

Repeal of 0.9% Tax on Earned Income in Excess of $200,000/$250,000

-58.6

-58.6

0

213

117

Increase Maximum Contribution Limit to HSAs

-18.6

-18.6

0

215

121

Allow Both Spouses to Make Catch-Up Contributions to Same HSA

-0.4

-0.4

0

216

122

Special Rule for Certain Expenses Incurred Before Establishment of HSAs

-0.2

-0.2

0

217

123

Repeal of Tax on Manufacturers and Importers of Branded Drugs

-28.5

-25.7

2.8

221

112

Repeal Fee on Health Insurance Providers

-144.7

-144.7

0

222

114

Repeal of 10% Excise Tax on Indoor Tanning Services

-0.6

-0.6

0

231

118

Repeal $500,000 Deduction Limit on Remuneration Paid to Employees of Certain Insurers

-0.5

-0.5

0

241

120

Repeal of 3.8% Net Investment Tax on Unearned Income for AGI in excess of $200,000/$250,000

-172.2

-172.2

0

251

119

Sources:

  • JCX-27-17 (May 24, 2017), Estimated Revenue Effects Of The Tax Provisions Contained In Title II Of H.R. 1628, The "America Health Care Act Of 2017," As Passed By The House Of Representatives

  • JCX-30-17 (June 26, 2017), Estimated Revenue Effects Of The Tax Provisions Contained In Title I Of H.R. 1628, The “Better Care Reconciliation Act Of 2017,” An Amendment In The Nature Of A Substitute As Posted On The Website Of The Senate Committee On The Budget On June 26, 2017

  • CBO, H.R. 1628, Better Care Reconciliation Act of 2017 [Draft proposal] Cost Estimate June 26, 2017

  • CBO: H.R. 1628, American Health Care Act of 2017 [as passed by House] Cost Estimate May 24, 2017

Following the announcement of the postponed vote, Republican senators gathered at the White House for a closed-door meeting with President Trump to discuss next steps. In remarks at the beginning of the meeting, Trump suggested a willingness to move on from healthcare if Republicans are unable to coalesce around a solution. “This will be great if we get it done, and if we don’t get it done, it’s just gonna be something that we’re not gonna like and that’s OK, and I understand that very well,” he said.

At a White House press briefing earlier that afternoon, deputy press secretary Sarah Huckabee Sanders said Trump remains optimistic that they’ll get a healthcare reform bill passed, and indicated that concerns about the postponement were overblown. “It’s never been about the timeline, but about getting the best piece of legislation that helps the most Americans,” she said.

Democrats remained staunchly opposed to the legislation. During a press briefing before McConnell announced the postponement, Senate Minority Leader Charles E. Schumer, D-N.Y., said that wealthy people would “gain an average of $57,000 in the tax break in this bill.”

Following McConnell’s announcement, Schumer told reporters the delay signals that “over the next couple of weeks, we know that Leader McConnell will try to use a slush fund to buy off Republicans, cut backroom deals to try and get this thing done.”

Schumer also said that changes to the legislation would not make the bill better for working families. “The American people are not for big tax breaks to the wealthiest of Americans, nor are they for dramatically cutting their healthcare. . . . That is not going to change with any little tweak that wins over this senator or that [one],” Schumer said.

Further Tax Changes?

Earlier that day, Senate GOP taxwriters continued to speculate that changes to the Senate bill may require additional revenues, but which taxes could be altered to boost the funds remained unclear.

Senate Finance Committee Chair Orrin G. Hatch, R-Utah, told reporters “we’ll have to see” whether any legislative changes would require more revenue. “We can’t keep putting this off,” he said, referring to the GOP’s campaign promises to repeal and replace the ACA.

But Sen. Ted Cruz, R-Texas, a member of the Republican working group focused on the healthcare legislation, flatly dismissed the idea of adding back revenues to help lower premiums.

Senate Finance Committee member Bill Cassidy, R-La., told reporters that he still has concerns about the legislation, particularly the reduction in the threshold to qualify for the premium tax credit structure, which the Senate bill alters from 400 percent above the federal poverty level to 350 percent.

“We have a lot of folks in our state who are in that 350 to 400 [percent] federal poverty level range that would pay substantially more for their premiums,” Cassidy said.

Two tax lobbyists told Tax Analysts that there could be changes to the underlying bill that would require additional revenues, but it remains unlikely that the tax structure of the legislation would change.

“They do seem to have about $200 billion to work with and still hit the [$133 billion] savings number from the House bill, so McConnell has some room to work to get votes,” including increasing funding for opioid treatment and prevention and making cuts to Medicaid less steep, a Republican tax lobbyist familiar with the healthcare debate told Tax Analysts. The lobbyist added that Sen. Rand Paul, R-Ky., would likely remain a no vote, but that others could be persuaded. 

Finance Committee member John Thune, R-S.D., said, “We’ve got some headroom fiscally that we can work with” regarding Senate Republicans’ concerns with tax credits and Medicaid provisions.

Thune told reporters that the decision to push back the vote was a “realistic and practical consideration that Senator McConnell made,” but acknowledged, “I’m of a view that the politics of this [don’t] get any easier the longer you wait, and if we can make some changes that improve the policy in a way that makes it more likely for 50 of our senators to vote for this, then this was a good judgment on behalf of the leader.”

When asked about the prospects of shifting to tax reform if there is not a conclusion on healthcare, Thune demurred, saying, “I think that we've got to take a run at this and I think our members realize we want to get to yes.”

Depicting a potential worst-case scenario for Senate Republicans, Sen. Marco Rubio, R-Fla., told reporters, “If we don’t do healthcare, then tax reform will have to be narrow.”

Martin A. Sullivan, David van den Berg, and Diamond Clark contributed to this article.

Follow Dylan Moroses on Twitter (@DMoroses3244) for real-time updates.