HHS Nominee Price Pushed on ‘Cadillac Tax,’ ACA at Hearing

For over 50 years, Bloomberg Tax’s renowned flagship daily news service, Daily Tax Report® has helped leading practitioners and policymakers stay on the cutting edge of taxation and...

By Colleen Murphy

Rep. Tom Price (R-Ga.), President Donald Trump’s pick for secretary of Health and Human Services, was pressed during his nomination hearing on whether repealing the Affordable Care Act’s taxes would only benefit the wealthiest Americans.

“There are taxes in Obamacare, and when it is repealed, there’s no question the taxes are going to be repealed—I promise you the taxes are going to be repealed,” Sen. Claire McCaskill (D-Mo.) said. “When those taxes are repealed, will anyone in America who makes less than $200,000 benefit from the repeal of those taxes?”

In response, Price said he “looked forward to working” with McCaskill and other lawmakers on a replacement plan, an answer McCaskill said was insufficient during the Jan. 24 Senate Finance Committee hearing.

The question of what to do with the law’s myriad tax provisions, which are used to fund it, has rankled lawmakers in the first weeks of the congressional session. Some Republican lawmakers say all the taxes should be repealed when the law is repealed, while others have acknowledged that some may need to be left in place to fund a replacement plan.

Repealing the law’s investment tax alone would bring $154,000 in annual savings for those with the highest incomes, according to the Tax Policy Center. The 400 wealthiest taxpayers—who earn more than $300 million each—would receive an average annual tax cut of $7 million, according to the Center on Budget and Policy Priorities.

The ACA raised taxes on Americans across income levels, Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) said in response to McCaskill, adding “those are facts that can’t be denied.”

Price, an orthopedic surgeon, is known as a vehement opponent of the ACA, and has previously crafted legislation to repeal it. As the HHS secretary, he would be the top health official in the nation and would likely play a key role in replacement of the law. However, Price dodged a question during the hearing about whether he has worked with Trump on a replacement plan, as the president has claimed, merely saying he has talked with Trump about health care in general.

Better Options

In response to a question at the hearing, Price said there are “options that may work better” than the “Cadillac tax” to ensure that individuals getting health insurance through their employer can get the coverage they desire.

He also called the tax—an excise tax on the part of high-cost health plans that exceed the limits—a middle-class tax increase. The tax is one of many provisions in the ACA, and although it hasn’t yet taken effect, it has attracted bipartisan calls for its repeal.

Price said he is committed to “carry out the law of the land,” in response to a question from Sen. Mark Warner (D-Va.) about whether he would use Trump’s executive order on the ACA as a catalyst to eliminate the requirement that individuals have health insurance before a replacement plan is in place.

Trump signed an executive order Jan. 20 instructing federal agencies to “minimize the unwarranted economic and regulatory burdens” of the ACA until it can be repealed.

A committee vote on Price’s nomination hasn’t yet been announced.

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.

Request Daily Tax Report