Republicans Remain Split on ACA Taxes Despite Trump’s Speech

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By Colleen Murphy and Alex Ruoff

Republicans in the House and Senate remain fractured on the shape of a tax credit in their Affordable Care Act replacement, despite the support President Donald Trump voiced for the idea in his joint address.

A refundable tax credit for individuals to purchase insurance is a signature aspect of House Speaker Paul D. Ryan’s (R-Wis.) vision for an overhauled health care system, and was included in a draft version of a repeal bill leaked on Feb. 24. But lawmakers weren’t convinced that Trump’s comments in his Feb. 28 speech were specifically in support of a refundable credit—which is subtracted from an individual’s tax debt—and further, some see the credit as an entitlement program, which is contrary to conservative values.

“If you want to put it in the repeal, conservatives are not going to go for it,” Sen. Rand Paul (R-Ky.) told reporters March 1. He is one of several Republican senators who came out this week against the leaked House plan, and said incorporating a refundable tax credit is more likely to pass in its own bill.

The lack of consensus across Congress shows the deeply complicated issues lawmakers must grapple with as they try to dismantle the law. While some lawmakers said Trump’s comments were an important signal of his support for congressional efforts, he didn’t give them specific direction on the issues still being debated.

Some members of the Energy and Commerce Committee are expected to privately review an updated repeal bill March 2, and Rep. Chris Collins (R-N.Y.), a member of the Health Subcommittee, told reporters he expects a markup next week. Elements are still being scored by the Congressional Budget Office, but he said the committee could still pass a bill without the scores and then adjust numbers down the line—potentially complicating efforts, as it must be reconciled with the version coming out of Ways and Means.

Members Quiet on Pitch Meeting

House Ways and Means Committee Chairman Kevin Brady (R-Texas) and Energy and Commerce Chairman Greg Walden (R-Ore.), the two lawmakers steering repeal efforts in the House, met with Republican senators for an hour March 1 to outline the House replacement plan. Members were tight-lipped after the meeting, offering little detail about their views of the plan or the details laid out.

Senate Finance Committee Chairman Orrin G. Hatch (R-Utah) and Walden both said the meeting was preliminary and didn’t result in any decisions. Still, senators did review an updated version of the leaked draft, Sen. Bill Cassidy (R-La.) said.

“It’s close to the proposal—but kind of like my daughter looks like my daughter, but from 10 years ago—it’s still my daughter, but they look different,” he said, adding he is still mulling the information offered.

Other Credit Options

“We should help Americans purchase their own coverage, through the use of tax credits and expanded Health Savings Accounts,” Trump said in his address. “But it must be the plan they want, not the plan forced on them by our government.”

Individuals and families could receive a tax credit of up to $5,000 for putting money into a health savings account in the replacement bill (S. 222) Paul introduced Jan. 24. Rep. Jim Jordan (R-Ohio), a leading member of the House Freedom Caucus, said he supports the credit incorporated in Paul’s bill, but opposes a refundable credit.

Beside’s Trump’s comments on tax credits, the rest of the speech aligned with Paul’s plan, House Freedom Caucus Chairman Mark Meadows (R-N.C.) said March 1. Some members and the chairmen of both the House Freedom Caucus and the Republican Study Committee have come out against the leaked repeal draft, presenting a major roadblock. Still, Republican leaders say the leaked version has evolved in the last few weeks.

The tax credits in the ACA are also refundable. An alternative to a refundable tax credit is a tax deduction, which would allow individuals to subtract an amount from income before paying taxes. But critics of deductions say they help the wealthy, and are of no use to those with low incomes.

“If you’re at 135 percent of poverty, you don’t have the money to buy health care, so the deduction doesn’t do you any good,” Rep. Pat Tiberi (R-Ohio), a member of Ways and Means, said.

On the other side of the Capitol, the idea may have more backing, Cassidy said.

“The refundable part, obviously a few people oppose it but most folks are supporting,” he said March 1.

Tax Writers Unsure

Ways and Means member Vern Buchanan (R-Fla.) said he is waiting to see a final bill before deciding whether he supports a refundable tax credit. He said legislation on the ACA repeal and tax overhaul is likely to continue evolving throughout the process. Republicans plan to repeal the ACA using the filibuster-proof reconciliation process.

“We’re going to get close to something, and then they’ll put it on the floor, and we’re going to have to make a hard choice on a lot of these issues,” Buchanan said.

Other members of the committee are similarly undecided, Buchanan said. Brady has previously said conversations are continuing between members and the plan is updated almost daily. No date for a markup has been announced.

Senators Question Cap

There is no clear consensus in the House or Senate on a proposal to cap the tax exemption for employer-sponsored health insurance. Brady had said replacing the exemption with a tax credit for individuals is needed to fund the replacement. But others think it will mean a tax increase for middle-class workers.

“I’m completely opposed to that—that’s the ‘Cadillac tax,’ and basically that’s a Democrat idea,” Paul said. “I don’t want a bunch of Democrat ideas dressed up in Republican clothing and stuck into the repeal bill. Let’s vote for repeal.”

Still, senators need to discuss the cap further, said Cassidy, who kept the ACA’s taxes intact in his own middle-of-the road replacement bill.

Senate Finance Committee ranking member Ron Wyden (D-Ore.) said Trump’s speech comments were “healthcare happy talk,” which is part of the reason for the disarray among Republicans. But, he said, another reason for the lack of unity is many Republicans want to kill all the ACA’s taxes, and “their numbers do not add up.”

“They’ve taken away all the revenue sources, they’re getting rid of all the taxes, and the numbers just don’t add up,” he said.

To contact the reporters on this story: Colleen Murphy in Washington at cmurphy@bna.com and Alex Ruoff in Washington at ruoff@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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