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Senate Releases Healthcare Bill, but Chances for Passage Unclear

Posted on June 23, 2017 by David van den Berg, Dylan F. Moroses

Senate Republican leadership unveiled legislation June 22 that would repeal most Affordable Care Act taxes while retaining some popular ACA provisions, but the odds of the bill’s passage were unclear after several Republican senators said they couldn’t support the bill without further changes.

The Better Care Reconciliation Act of 2017 is a substitute amendment to the American Health Care Act (H.R. 1628), which narrowly passed the House in May. 

The Senate is expected to vote on the GOP healthcare measure before the week-long Independence Day recess, but only after the Congressional Budget Office releases an estimate of the bill’s impact on insurance coverage and the budget deficit. The CBO, which estimated that the House bill would cause 23 million Americans to lose coverage, could release a score of the Senate draft legislation as early as June 26.

Other than some shifting of effective repeal dates, the tax policies in the Senate product largely resemble those in the AHCA. Both bills keep the retroactive repeal of the individual and employer mandate penalties, reducing them to zero and providing penalty relief beginning for those affected in 2016. The two bills also delay the enactment of the 40 percent excise tax on high-cost health insurance plans, known as the Cadillac tax, until 2026.

The two bills include repeal of the health insurance tax and the 3.9 percent net investment income tax on high-income individuals beginning this year, and repeal of restrictions on health savings accounts that would be retroactive to this year. They also would reinstate a pre-ACA deduction for expenses allocable to Medicare Part D subsidy payments. Both the House and Senate legislation also would repeal the ACA's additional Medicare taxes beginning in 2023.

Changes in the Senate legislation include the repeal of some limitations on contributions to flexible spending accounts, delaying the repeal to the beginning of 2018 as opposed to repealing it this year as in the AHCA. The Senate bill also would delay repeal of the medical device excise tax and the tax on prescription medications one year, to 2018. The tanning tax would be repealed beginning October 1, a three-month delay from the House bill.

The income threshold for the medical expense deduction is proposed to decrease from 10 percent to 7.5 percent in the Senate legislation beginning this year, an increase from the reduction to 5.8 percent that the House proposed in the AHCA.

The Senate legislation would reduce the eligibility threshold for current law premium tax credits from 400 percent of the federal poverty line to 350 percent beginning in 2020, eliminate the section 45R small business health insurance tax credit starting in 2020, and bar any federal healthcare subsidies from being used to fund abortion services beginning in 2018. The premium tax credits would also be revamped to be advanceable and refundable when purchasing a “benchmark” plan, which is described as 58 percent of the actuarial value of a qualified health plan.

The premium tax credits would be adjusted for both income and age, a change from the age-adjusted healthcare tax credits that included an income threshold proposed in the AHCA. Some elderly individuals and low-income families could receive almost 5 percent more in premium assistance under the Senate proposal compared with the AHCA. 

The Senate bill lacks the continuous coverage provision the House included as a replacement for the ACA's individual and employer mandates.

Some Republican Opposition

Following release of the Senate bill, four Republican senators announced opposition, signaling their willingness to side with Democrats and scuttle the bill unless changes are made.

The four Republican opponents — none of whom sit on the Senate Finance Committee — are Sens. Rand Paul of Kentucky, Ron Johnson of Wisconsin, Mike Lee of Utah, and Ted Cruz of Texas. Under budget reconciliation rules, the legislation can pass with 51 votes, leaving almost no margin for defections among the upper chamber’s 52 Republicans.

Paul identified several problems with the bill while speaking to reporters but didn’t suggest that any single change would bring him on board. “Basically we’re keeping too much of Obamacare in the bill,” he said.

“This bill has probably, we think, more Obamacare subsidies, or at least as much as is already in Obamacare,” Paul said, adding that the bill’s addition of a state stabilization fund with the subsidies it calls for creates a measure that “may exceed Obamacare.”

Cruz said the current draft of the bill would not pass the Senate, but added that lowering premiums would be integral to getting more support. “The working group agreed at the outset we would negotiate until we reach agreement — we don’t have agreement now,” Cruz told reporters, adding, “We can get there, but we need to do more to lower premiums. That is, I believe, the only path to getting to a bill that can actually pass into law.”

In a statement, the four Republicans said they are open to negotiation and to receiving further information before the bill goes to the floor. Asked what the minimum was to get his vote, Johnson said, “Proper information.”

Finance Committee member John Thune, R-S.D., told reporters, “I think everybody wants to get to yes,” and that lawmakers need to communicate what changes they want. But when asked about Paul, he said, “I’m not sure that Rand will ever be there.”

Senate Republicans gathered to discuss the bill the morning of June 22, but after that meeting, several said they expect changes to the measure.

Finance Committee member Bill Cassidy, R-La., told reporters he expects changes to the bill and wouldn’t commit to voting yes on it before reviewing its text. “I still have to see what the generosity of the credits are so that, as this is scaled back, we don’t lose the ability for lower-income folks to be able to afford insurance,” he said, referring to the proposed phase-out of the Medicaid expansion.

Sen. Tim Scott, R-S.C., also a Finance Committee member, told reporters he is “open to moving forward on the legislation” and noted that the bill is just in draft form. “We’re going to make a lot of changes over the next seven days,” he said. 

Democrats Object

While Republicans expected changes but generally supported the bill, Democrats blasted it.

“The Senate version of Trumpcare is even meaner than the House bill,” Senate Minority Leader Charles E. Schumer, D-N.Y, said at a press conference. “There’s a lot to unpack in this bill, but its general outline is very simple and very clear. It cuts healthcare for those who need it most just to give a tax break to those who need it least.”

Sen. Patty Murray, D-Wash., ranking minority member of the Senate Health, Education, Labor, and Pensions Committee, said the Senate’s proposal is “every bit as bad as what the House passed.”

The idea that Democrats are not interested in working with Republicans on healthcare legislation, as Republicans have claimed, is nonsense, said Finance Committee ranking minority member Ron Wyden, D-Ore. “Not once have I or my colleagues been asked by a single Republican to work on this bill or discuss fixes — bipartisan fixes — to the Affordable Care Act,” he said. “The statement this morning that Democrats refused to work with the other side is not just a fiction, it is a gross fiction.”

House Minority Leader Nancy Pelosi, D-Calif., said Republicans’ course of action on healthcare reform may indicate their unwillingness to work in a bipartisan way on other issues such as infrastructure and tax reform.

“We thought we could work together on infrastructure, we could work together on reducing the corporate rate, closing special-interest loopholes, reducing the deficit, creating growth by working together on it, but I fear that what they may do is just get through this debate on healthcare to enable them to get on to the debate about taxes and just, again, [use] trickle-down economics to prevail,” she said during a weekly press briefing.

Pelosi also said that the working draft of the Senate healthcare bill is a “tax bill disguised as a healthcare bill” and that Republicans need the bill in place “in order to do their tax breaks for the high end to the tune of hundreds of billions of dollars.”

Asha S. Glover, Diamond Clark, and Stephen K. Cooper contributed to this article.

Follow Dylan F. Moroses (@DMoroses3244) and David van den Berg (@TAtaxDavidVDB) on Twitterfor real-time updates.