Examining The House Republican ACA Repeal And Replace Legislation
On March 6, 2017, the House Republican leadership introduced Affordable Care Act repeal and replacement budget reconciliation bills in the
Ways and Means (W&M) (
summary) and
Energy and Commerce (E&C) (
summary) committees. The bills, collectively titled the American Health Care Act, are the committees’ responses to the instructions they received in the
Budget Resolution passed by both houses of Congress in mid-January to prepare budget reconciliation legislation to repeal the ACA.
The committees will begin
markup of the bills on March 8, 2017. (E&C will also on that day consider a
resolution offered by a group of Democratic House members that would request President Trump to direct Health and Human Service Secretary Price to transmit to the House documents relating to the administration’s plans to repeal and replace the ACA. If the bills are passed by the committees they will be combined by the House Budget Committee and sent to the House Rules Committee, and then to the full House for a vote. The Congressional Budget Office has not released cost estimates of the legislation and it appears that committee markups will proceed without out CBO reports.
In
considering the Affordable Care Act in 2009 and 2010, the House held 79 hearings over the course of a year, heard from 181 witnesses and accepted 121 amendments. The current House leadership hopes to get the repeal and replacement legislation through the House in three weeks. The Senate adopted the Affordable Care Act only after approximately 100 hearings, roundtables, walkthroughs and other meetings, and after 25 consecutive days in continuous session debating the bill. It is expected that the current House bill will go directly to the floor of the Senate for a vote. Whatever passes the Senate will return for a conference with the House, if it varies from the House bill, and then go to the President for his signature.
Repealing Revenue Provisions
The W&M bill repeals a host of ACA tax provisions including:
- The $500,000 limit on business expense deductibility for compensation to insurance executives;
- The tanning tax;
- The branded prescription drug tax;
- The health insurance tax;
- The Medicare tax imposed on unearned income on taxpayers earning more than $200,000 ($250,000 for joint filers);
- The “Cadillac” plan tax (which reappears in 2025, apparently to satisfy Senate prohibitions on reconciliation provisions that increase out-year deficits);
- The prohibition against paying for over-the-counter medications with tax subsidized funds from health savings accounts (HSAs), Archer MSAs, or flexible spending or health reimbursement arrangements;
- The ACA’s increase in the penalty for the use of HSA and Archer MSA funds for non-medical purposes (reducing the penalty from 20 to 10 percent for HSAs and 20 to 15 percent for MSAs);
- The $2500 limit on contributions to flexible spending accounts;
- The medical device excise tax;
- The requirement that employers reduce their deduction for expenses allowable for retiree drug costs without reducing the deduction by the amount of retiree drug subsidy;
- The increase in the level of medical expenses that must be incurred to claim a tax deduction, reducing the level back from 10 percent to 7.5 percent;
- The repeal of the ACA’s Medicare .9 percent tax surcharge on taxpayers with incomes exceeding $200,000 ($250,000 for joint filers).
These taxes are repealed as of the end of 2017. The Joint Committee on Taxation estimates that the repealed taxes will cost $593.7 billion over ten years.It is hard to see in the absence of a CBO report how the repeal bill makes up for this lost revenue, other than by cutting Medicaid spending.
The New Tax Credits
The tax credit is not be adjusted for geographic differences in health care costs, and the 2 to 1 age adjustment would fall far short of making up for the 5 to 1 ratio allowed under for age rating. Younger and wealthier individuals in low cost areas of the country would be better off than under the ACA, but older and poorer individuals and individuals in higher cost areas would be worse off. An
analysis of the changes by David Cutler, John Bertko, Topher Spiro, and Emily Gee projects that the combined repeal of the cost sharing reductions and the changes in the premium tax credits would increase costs for the average marketplace enrollee by $2,409 for 2020, with individuals aged 55 to 64 experiencing a $6,971 increase and costs for individuals below 250 percent of poverty increasing by $4,061. The Kaiser Family Foundation website offers an
interactive map illustrating who wins and who loses.
Examining The House Republican ACA Repeal And Replace Legislation
