Republicans on Retreat Found No Answers to ACA Tax Questions

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By Colleen Murphy

How to handle the Affordable Care Act’s myriad tax provisions remains a puzzle for Republican lawmakers.

The topic was one of several problem areas lawmakers highlighted during a two-hour meeting Jan. 27 at a party retreat in Philadelphia first reported by the Washington Post. A recording of the session leaked to the press highlights major questions that still exist around the repeal and replacement of the law, which remains a top priority for Republican lawmakers.

House Ways and Means Committee Chairman Kevin Brady (R-Texas) told reporters Jan. 30 the session was valuable because no decisions have been made yet, and lawmakers were able to hear “different ideas on how best to approach a very complex issue.” There is no timeline for a markup on the committee’s reconciliation portion, he said.

Here is a look at some of the tax-related questions that arose during the Philadelphia meeting.

How Will It Be Paid For?

Republican lawmakers haven’t yet coalesced around a plan to fund replacement legislation, particularly because they lack consensus on whether all of the taxes should be repealed outright or if some must be left in place. The ACA’s tax provisions, including an excise tax on indoor tanning salons, brought in billions of dollars used to fund it.

“This is going to cost money—this is going to cost a lot of money. If I understand correctly, all the funding mechanisms are going to be repealed when we do the reconciliation,” Rep. John Faso (R-N.Y.) said. “I want to vote for this thing, but I need to know about a funding mechanism.”

Faso’s office confirmed his remarks to Bloomberg BNA.

That question will hopefully be answered in the next few weeks once committees hold hearings on various elements of the law, Sen. Lamar Alexander (R-Tenn.) said in response. Before finding a funding plan, lawmakers need to figure out exactly how much the revamped law will cost, he said. Alexander’s office confirmed his remarks to Bloomberg BNA.

“How much do the conservative reforms we put in place cost? And then once we figure out how much they cost, we are going to have to figure out how to pay for them,” he said. Alexander is the chairman of the Committee on Health, Education, Labor and Pensions.

How Is Middle Class Affected?

The impact of tax changes on the middle class was also a topic during the meeting, as some Democratic lawmakers have said tax cuts may benefit only the most wealthy families. That result was also a question that Rep. Tom Price (R-Ga.), President Donald Trump’s pick for secretary of Health and Human Services, faced during his nomination hearing last week.

Brady has previously said repealing the law’s taxes will help middle-class families who currently can’t afford quality coverage, a sentiment echoed in the GOP tax overhaul blueprint released in June.

A refundable tax credit may not help middle-class families who can’t afford to prepay their premiums and wait for a tax refund, Rep. Pete Sessions (R-Texas) said. His office confirmed his remarks to Bloomberg BNA.

The middle class would be better off if lawmakers left existing taxes on hospitals, insurance companies and pharmaceutical companies in place, Sen. Bill Cassidy (R-La.) told reporters Jan. 30. All taxes stay in place under replacement legislation Cassidy introduced Jan. 23. Repeal of more taxes could occur during tax overhaul later in the congressional session, he said, adding that lawmakers didn’t reach consensus on the matter during the retreat.

How Can We Help Self-Employed, Small Businesses?

Employer-paid premiums for health insurance are exempt from federal income and payroll taxes, which reduces the tax bills for most workers.

Brady said lawmakers are considering ways to “unlock that tax break” and turn it into a tax credit to help small businesses and individuals without employer-sponsored coverage. The break totals about $3.6 trillion over 10 years, he said. Brady introduced himself during the session. His office didn’t return a request for further comment.

“So could you unlock just a small portion at the top to be able to give that freedom, that’s the question,” he said during the session.

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

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