Health Care Taxes Likely to Survive ACA Repeal—for Now

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By Colleen Murphy and Laura Davison

House Republicans are aiming to repeal the Affordable Care Act by Feb. 20, but they are likely to keep the ACA-related taxes around for a while.

Included in the law are tax provisions such as excise taxes on health insurers and medical device manufacturers, many of which were axed in repeal legislation ( H.R. 3762) that President Barack Obama eventually vetoed in January 2016. But without a replacement plan in hand, Republicans aren’t sure which or how many of the taxes will remain intact to pay for the replacement legislation. The medical device tax and a tax on the parts of high-cost health plans that exceed limits were delayed for two years in a 2015 omnibus bill.

“You can’t replace it without having some cost,” Sen. Johnny Isakson (R-Ga.) told Bloomberg BNA Jan. 4. “Where we find that sweet spot, I don’t know, but it will take some bipartisan effort to do it.”

Rep. Pat Tiberi (R-Ohio), chairman of the House Ways and Means health subcommittee, told reporters Jan. 4 there isn’t yet consensus on whether to repeal the tax provisions outright, or set them up to be phased out after a delay. He acknowledged that one complication is finding a way to fund the new legislation.

Obama met with Democratic lawmakers Jan. 4 to discuss a response to Republican efforts, though the tax aspects weren’t the focus, lawmakers said.

The Timing

Senate Budget Committee Chairman Michael B. Enzi (R-Wyo.) on Jan. 3 released the text of a budget resolution (S. Con. Res. 3) to serve as the jumping off point for repeal efforts. The resolution gives Senate committees until Jan. 27 to turn their proposals into legislative language.

Republicans are seeking to have a repeal bill on President-elect Donald Trump’s desk a month into his term. Rep. Chris Collins (R-N.Y) told reporters that the majority party will then rally behind a replacement proposal in the six months following the ACA nullification.

“We’re going to have to, over the next six months, put that pen to paper,” Collins said. “And we’re going to do it in an open process, regular order, through committees, through hearings.”

Ways and Means Chairman Kevin Brady (R-Texas) is a fan of regular order, but is less confident that a replacement plan will be in place before Congress breaks for recess in August.

“We want to take our time to make sure there is an effective transition set up,” Brady said. “I’m hopeful that we can continue to lay out those pieces on a step-by-step basis this year.”

Possible Replacement Options

Vice President-elect Mike Pence said health savings accounts—tax-advantaged savings vehicles restricted to paying for health care costs— could be in the mix of ideas for replacement.

“I would commend all of your attention to the president-elect’s speech in Philadelphia during the waning weeks of the campaign, where he laid out a plan to repeal and replace Obamacare. He laid out the principles of harnessing the power of health savings accounts, allowing Americans to purchase health insurance across state lines,” Pence told reporters Jan. 4 after meeting with House Republicans at the U.S. Capitol.

Pence said the incoming administration wants to ensure there is an orderly transition to a revamped health care system. “We’re working right now—the White House staff is—on a series of executive orders that will enable that orderly transition to take place even as the Congress appropriately debates alternatives to and replacement of Obamacare,” Pence said.The Republican Study Committee on Jan. 4 released a replacement proposal that closely mirrors what the group put out last year. The plan would fully repeal the ACA on Jan. 1, 2018, though it doesn’t include a replacement timeline, Rep. Mark Walker (R-N.C.) said during a news conference Jan. 4. The bill would create a standard deduction of $7,500 for individuals and $20,500 for families, instead of using tax deductions for employer-sponsored insurance. It also would expand support for high-risk pools and allow individuals to purchase insurance across state lines.

With assistance from Jonathan Nicholson in Washington.

To contact the reporters on this story: Colleen Murphy in Washington at and Laura Davison in Washington at

To contact the editor responsible for this story: Meg Shreve at

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

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