House-Passed Health Bill Would Roll Back Most of ACA Taxes

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By Colleen Murphy, Laura Davison and Kaustuv Basu

Republicans heralded the passage of their health care bill, which would kill most of the Affordable Care Act’s taxes, as a major check mark for their agenda and an important step on the path to tax reform.

The House on May 4 passed the bill (H.R. 1628) by a vote of 217-213 using a filibuster-proof reconciliation structure and with no support from Democrats.

In a floor speech ahead of the vote, House Democratic Leader Nancy Pelosi (D-Calif.) said the bill has gone from bad to worse.

The bill’s passage follows months of infighting and false starts and is a significant win for President Donald Trump and House Speaker Paul D. Ryan (R-Wis.).

House leadership previously yanked the bill from the floor ahead of a March 24 vote after realizing they didn’t have the votes needed to pass it. After that version of the bill landed with a thud, many Republicans said they thought it had been too rushed, and members of the House Ways and Means Committee said they felt shut out of the negotiating process. But in the lead-up to and aftermath of the May 4 vote, the tone was upbeat: Ways and Means members told Bloomberg BNA they can now continue to focus on tax reform with more impetus behind them.

“It creates momentum for tax reform in a major way,” Ways and Means Chairman Kevin Brady (R-Texas) said. “But secondly, it takes $1 trillion of tax hikes out of the economy that has really been hurting small businesses, patients and communities.”

Focus on Tax Elements

The bill includes tax credits that are refundable and increase with age, and a manager’s amendment that would set aside $85 billion for the Senate to increase the credits for individuals ages 50 to 64 who could see premium increases if the bill became law. It would repeal all of the ACA’s tax provisions except a 0.9 percent Medicare surtax on high-income earners that will remain until 2022.

Among those provisions is a 3.8 percent tax on net investment income of high-earners. Repealing that tax was included in Trump’s bullet-point tax plan released April 26, though Republicans have previously said they didn’t plan to touch the tax provisions in tax reform.

The measure now heads to the Senate, where members are expected to alter it significantly before sending it back to the House for another vote. At the top of their agenda will be expanding the bill’s tax credits, which were a sticking point even among House Republicans. Some senators, including Bill Cassidy (R-La.), previously introduced replacement bills that kept ACA tax provisions intact.

“This is a great plan, I actually think it will get even better,” Trump said in a Rose Garden ceremony immediately after the bill’s passage.

The House Responds

The Congressional Budget Office hasn’t released a revenue score reflecting last-minute amendments to the bill, though some Republicans said the new score isn’t needed.

Rep. David Schweikert (R-Ariz.), a member of Ways and Means and the House Freedom Caucus, said the math on the bill is out of the hands of the House.

“Ultimately, we’re going to have see what the bill looks like as it comes out of the Senate to actually know what tax exposure flexibility we have to model into reform. So, you’re going to have set that aside,” he said.

Moderate and hard-line Republicans haggled over additional amendments to the bill for the past several weeks. Republicans agreed May 3 to an amendment from Reps. Fred Upton (R-Mich.) and Billy Long (R-Mo.) that adds $8 billion in funding to the bill to help offset premiums for individuals with pre-existing conditions.

House Republicans are much further along on tax legislation than they were when they started putting together legislation to repeal and replace the ACA, said Rep. Tom Rice (R-S.C.), a member of Ways and Means.

Ways and Means Republicans have been meeting nearly every day they’ve been in session since the tax plan came out last June, he said.

“It’s a lot more fleshed out. We’ve had a lot more time. We have more a firm foundation than we did with health,” Rice said. “If we would have taken a little bit more time on the front end,” maybe there wouldn’t have been all the back and forth on the health bill.

To contact the reporters on this story: Colleen Murphy at cmurphy@bna.com, Laura Davison at lDavison@bna.com and Kaustuv Basu at kbasu@bna.com, in Washington

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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