The new Senate healthcare bill that Majority Leader Mitch McConnell, R-Ky., plans to release July 13 could retain as much as $230 billion in the Affordable Care Act’s taxes on high-income earners.
“I think right now we’ve [got] word that there will be a plan to keep somewhere between $172 [billion] and $230 billion in taxes, basically on the income on higher-bracket households,” Sen. Mike Rounds, R-S.D., told reporters July 12.
But Rounds also suggested that those taxes could be preserved only “for a period of time, hopefully with a sunset on it.” Retaining the taxes will “give us enough resources to take care of part of the Obamacare hangover that we’ve got in this transition,” he said. “We’ve got to transition out of Obamacare.”
There has been rampant speculation over what changes might be made to the Senate’s Better Care Reconciliation Act (BCRA) to win more Republican support for passage. McConnell said July 11 that an updated bill would be released July 13, while a Congressional Budget Office report on the updated bill and a subsequent vote on the bill are expected the week of July 17.
Among the taxes on high-income earners that could be retained are the 3.8 percent net investment income tax, the 0.9 percent increase in hospital insurance payroll tax rates, and the $500,000 cap on the deduction for health insurance executive pay. Repealing those three provisions, as the original BCRA would have done, would cost $231 billion over 10 years, according to the Joint Committee on Taxation’s most recent estimates (JCX-30-17).
The potential retention of some ACA taxes comes as some rank-and-file Republicans have expressed concern about the perception that the GOP healthcare bills give tax breaks to wealthy workers at the expense of taking away coverage from low-income families. But one tax lobbyist suggested that if Republicans were to keep those taxes in law, it could spur a revolt among right-wing interest groups and stakeholders that have long sought to reduce the effective tax rates on investment income and capital gains.
Other tax changes expected to be incorporated into the updated bill include expanding the bill’s proposed premium tax credits and expanding health savings account rules to allow the use of those funds to pay for insurance premiums. Another tax lobbyist familiar with the negotiations said the latter change would be limited to those purchasing insurance plans on the individual market.
Enough for 51?
Whether those tax changes — and other changes reportedly under consideration — are enough to pull in 51 votes for the updated bill remains unclear, but at least one Republican senator has said the new bill still won’t get his vote.
Sen. Rand Paul, R-Ky., who announced his opposition to the measure when the first draft was released June 22 and has criticized it since, reiterated his critique July 12, calling it the “same as the old bill, except for worse.”
“This bill is going to leave in place more of the Obamacare taxes, leaves in place the Obamacare regulations, and it also adds $70 billion to the insurance bailout superfund,” Paul told reporters. “If they’re going to leave a huge, giant superfund for the insurance companies in it, I can’t vote for that.”
It’s disappointing and surprising that Republicans are struggling to move healthcare legislation after campaigning for four elections on repeal of the ACA, Paul said. “Now we’re at 50 percent of the Obamacare taxes and people are still complaining,” he said. “We’re not even voting for repeal and we can’t even get all the Republicans on board.”
Other senators appear ready to go back to the drawing board on healthcare. Senate Finance Committee member Thomas R. Carper, D-Del., said some bipartisan work on healthcare is underway in the Senate now, noting that he has been meeting with Senate Republicans and GOP governors to discuss a three-step plan for moving forward on healthcare.
“What I’m trying to impart on them is, it’s a good time to hit the pause button,” Carper told reporters. “Three things we ought to try to do: One, on the Affordable Care Act, fix what needs to be fixed. Number two, preserve that which needs to be preserved. Number three, drop the parts that need to be dropped.”
Carper said that he and Sen. John McCain, R-Ariz., met earlier in the week and agreed that the Senate must return to regular order by introducing and marking up a bill and then amending it on the Senate floor. He suggested that McConnell and Senate Minority Leader Charles E. Schumer, D-N.Y., could agree to stabilize the insurance markets as a first step toward bipartisanship.
House Democrats Charting Own Course
House Democrats, who were unanimous in their opposition to the American Health Care Act (H.R. 1628) when it passed the House in May, appear unlikely to support a potential Senate bill that retains some ACA taxes.
“We have to look at the bill on balance to see how it would impact working class Americans and average Americans,” House Ways and Means Committee member Linda T. Sánchez, D-Calif., told reporters. “The basics of the Republican healthcare bill are so fundamentally flawed that I have a hard time seeing how playing around the edges would make it somehow palatable to bring it back to the House for Democratic support," she said.
Ten House Democrats, including taxwriters Terri A. Sewell of Alabama, Ron Kind of Wisconsin, and Suzan K. DelBene of Washington, released their own plan to fix the ACA on July 12. Called “Solutions Over Politics,” the plan calls for considering aligning open enrollment for healthcare with tax season, and for providing additional targeted premium support based on age, geography, and income, the group said in its announcement.
“Our proposal addresses some of [the] biggest challenges in our healthcare system with common-sense solutions, like protecting premium assistance, promoting continuous coverage, and protecting essential health benefits,” said Sewell. “The Affordable Care Act delivered affordable healthcare to millions of Americans. Rather than going back on that promise, it’s our job in Congress to improve the ACA by reducing costs, increasing coverage, and stabilizing the marketplace.”
Stephen K. Cooper contributed to this article.