GOP Health Plan’s Taxes Continue to Rankle Republicans

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By Colleen Murphy

The future of House Republicans’ rewrite of the health care system looks bleak already, one day after leadership rolled out the plan.

Some of the main sticking points involve the bill’s tax provisions. House conservatives in the Freedom Caucus and Republican Study Committee slammed the bill hours after its March 6 release for creating a new entitlement program through a refundable tax credit and failing to immediately end all of the Affordable Care Act’s taxes. Conservative groups, including FreedomWorks, came out against the bill March 7, derisively calling it “Obamacare Lite.”

The rancor surrounding the bill, one day before two committees are set to mark it up, signals the delicate balance House leadership will need to strike, and to continue to finesse, as they work to get Republicans in line behind the bill. Lawmakers plan to pass it using a reconciliation process, which would be filibuster-proof in the Senate, but they can’t afford to lose many members of their own party on the House side.

“I think the passage of this legislation is very much in doubt,” said House Minority Whip Steny H. Hoyer (D-Md.).

Even House Ways and Means Committee Chairman Kevin Brady (R-Texas), the leading architect of the plan, acknowledged that dissent within his conference meant the death of his preferred pay-for for the replacement: a limit on the tax exemption for employer-sponsored health plans. Critics of that idea said it looked too much like the reviled “Cadillac tax,” a 40 percent excise tax on parts of high-cost health plans. Leadership initially floated a cap at the 90th percentile of premiums, but Brady said they decided against it after “listening very carefully to House Republicans, the entire conference, across the philosophical spectrum.”

“At the end of the day, our conference, the direction they gave us, was that was not a decision they were comfortable with today, so we decided to go a different direction,” he said during a March 7 news conference.

Full Steam Ahead

Still, lawmakers suggested the bill is just the first step toward dismantling the ACA, and changes are likely in the coming days. Vice President Mike Pence called it “the framework for reform” at a news conference on Capitol Hill March 7.

“We are certainly open to improvements and recommendations in the legislative process,” Pence said before heading to a meeting with members of the House.

Contradicting those claims is an aggressive three-week timeline in which leadership hopes to have the bill signed by President Donald Trump. The Senate will likely vote on the bill without holding hearings or making changes in committee, because it will have been thoroughly vetted in the House first, lawmakers said March 7.

Once the bill comes to the Senate, Majority Leader Mitch McConnell (R-Ky.) said he is ready to forge ahead with a floor vote, likely the week of March 27—one week before the start of the Easter recess.

One major variable is the lack of a final score from the Congressional Budget Office, which will tabulate the cost of the bill and the number of individuals who will lose coverage. That score could come by March 10, McConnell said. The two House committees crafting repeal legislation—Ways and Means and Energy and Commerce—are set to hold markups March 8 without a score—something Republican and Democratic lawmakers have said is irresponsible.

The office of House Minority Leader Nancy Pelosi (D-Calif.) said, however, that the CBO score could come March 13.

House Speaker Paul D. Ryan (R-Wis.) said during a March 7 news conference he is confident he has the 218 votes needed to pass the bill. When asked about the potential for individuals to lose coverage,” he said, “What matters is that we’re lowering the cost of healthcare and giving people access to health care plans,” adding that it is unfair to compare it to a system in which the government requires coverage.

The U.S. Chamber of Commerce supports the bill, in particular the repeal of the tax elements, according to a March 7 letter.

Tax Troubles

McConnell was vague when asked how he is telling senators about the funding mechanisms for the bill. “We’re going to have plenty of time to look at it,” he said.

The bill repeals the ACA’s taxes—which helped fund it starting in 2018. Under the proposal, the controversial 40 percent excise tax on parts of high-cost health plans, the “Cadillac tax,” would return in 2025 in order to fit within Senate rules.

Repealing the ACA’s tax provisions will cost the government at least $593.7 billion over the next decade, according to the Joint Committee on Taxation.

Included in the repealed taxes are the 3.8 percent tax on net investment income and a 0.9 percent surcharge on couples’ income above $250,000—leading some to say it looks like a tax cut for the wealthy.

Brady said he disagrees with that notion. The taxes “hurt health care, hurt the economy, achieved nothing,” he said.

Freedom Caucus Gears Up

Members of the House Freedom Caucus said during a March 7 news conference that the House plan doesn’t do enough to lower health care costs for the American people and is contrary to Republican beliefs because it creates an entitlement and keeps ACA taxes. The caucus plans to negotiate with House leadership and the White House to make adjustments to the plan, something Pence promised when he met with lawmakers March 7, the members said.

“What we have now is an opening bid,” Rep. Mark Sanford (R-S.C.) said, adding that the existence of a refundable tax credit shouldn’t be something true conservatives tolerate.

Rep. Jim Jordan (R-Ohio) and Sen. Rand Paul (R-Ky.) on March 8 will reintroduce the 2015 repeal legislation that passed Congress and was vetoed by former President Barack Obama. The topic didn’t come up in the March 7 meeting with Pence.

The caucus came out against a leaked draft of the House bill, and members have repeatedly called for a clean repeal bill and separate replacement legislation. Lawmakers “have to admit we are divided on replacement strategies,” Paul said.

Rep. Mark Meadows (R-N.C.), chairman of the caucus, said he has taken votes from members about their position on the House bill, but wouldn’t reveal the numbers. The caucus was meeting late March 7 to delve deeper, and negotiations had already begun, he said.

Meadows himself may be open to some future negotiation. He told reporters after the news conference that he is open to a refundable tax credit “in some scenario,” because he knows it could help those who are low-income. Still, Meadows said he won’t support the creation of a new entitlement program.

To contact the reporter on this story: Colleen Murphy in Washington at cmurphy@bna.com

To contact the editor responsible for this story: Meg Shreve at mshreve@bna.com

Copyright © 2017 The Bureau of National Affairs, Inc. All Rights Reserved.

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