Repub­li­can se­na­tors face dilemma in re­peal ef­fort

Law­mak­ers can cut taxes or pre­serve cov­er­age for mil­lions — prob­a­bly not both.

Los Angeles Times - - BUSI­NESS - By Noam N. Levey

WASH­ING­TON — As they wres­tle with how to re­place the Af­ford­able Care Act, Se­nate Repub­li­cans face a crit­i­cal choice be­tween cut­ting taxes or pre­serv­ing health cov­er­age for mil­lions of Amer­i­cans, two com­pet­ing de­mands that may yet de­rail the GOP push to roll back the 2010 health­care law.

House Repub­li­cans, who passed their own Oba­macare re­peal mea­sure this month, skirted the dilemma by cut­ting both taxes and cov­er­age.

Their bill — em­braced by Pres­i­dent Trump — slashed hun­dreds of bil­lions of dol­lars in taxes, a key goal of GOP lead­ers and the White House as they seek to set the stage for a larger tax over­haul this year.

At the same time, the House leg­is­la­tion cut more than $1 tril­lion in health­care as­sis­tance to low- and mod­er­ate-in­come Amer­i­cans, a re­trench­ment that the non­par­ti­san Con­gres­sional Bud­get Of­fice es­ti­mates would nearly dou­ble the ranks of the unin­sured over the next decade to more than 50 mil­lion.

In the Se­nate, cov­er­age losses on that scale are wor­ri­some to many rank-and­file Repub­li­cans whose states have seen ma­jor cov­er­age gains un­der Oba­macare. That makes the preser­va­tion of ben­e­fits one of the big­gest chal­lenges con­fronting Se­nate Ma­jor­ity Leader Mitch McConnell (R-Ky.) and other GOP lead­ers.

“Cov­er­age mat­ters,” Sen. Bill Cas­sidy (R-La.) said re­cently on MSNBC’s “Morn­ing Joe” pro­gram, not­ing the im­por­tance of pre­serv­ing Med­i­caid spend­ing in the cur­rent law. “To some­one [who] is lower-in­come,

you’re go­ing to need those dol­lars to cover that per­son.”

Yet mod­er­at­ing cuts to Med­i­caid and other govern­ment health pro­grams with­out driv­ing up bud­get deficits could force Repub­li­can se­na­tors to also dial back the tax cuts that many in the GOP want.

“It’s not that com­pli­cated .... If you want to use money for tax re­form, you can’t have it for health cov­er­age,” said Gail Wilen­sky, a vet­eran Repub­li­can health pol­icy ex­pert who ran the Medi­care and Med­i­caid pro­grams un­der Pres­i­dent Ge­orge H.W. Bush. “You can’t do both.”

McConnell con­vened a group of GOP se­na­tors — quickly panned for in­clud­ing only white men — to de­velop Oba­macare re­place­ment leg­is­la­tion, though the panel largely ex­cluded Repub­li­can law­mak­ers who are most con­cerned about cov­er­age, in­clud­ing Cas­sidy. McConnell has since said all Se­nate Repub­li­cans would be in­volved in de­vel­op­ing an Oba­macare re­place­ment.

The trade-off be­tween cut­ting taxes and pre­serv­ing Amer­i­cans’ health pro­tec­tions re­flects in part the leg­isla­tive pro­ce­dure that con­gres­sional Repub­li­cans have cho­sen to re­peal the Af­ford­able Care Act.

That process, known as bud­get rec­on­cil­i­a­tion, al­lows Se­nate Repub­li­cans to pass their Oba­macare re­peal with a sim­ple ma­jor­ity, rather than the 60-vote su­per­ma­jor­ity that is usu­ally re­quired to pass con­tro­ver­sial leg­is­la­tion. (Repub­li­cans have only a 52-48 ma­jor­ity in the Se­nate.)

But to qual­ify for bud­get rec­on­cil­i­a­tion un­der Se­nate rules, the bill must re­duce the fed­eral deficit over the next decade.

Tax cuts alone typ­i­cally do the op­po­site, driv­ing up bud­get deficits.

The tax cuts in the House Repub­li­can health­care bill to­tal more than $600 bil­lion over the next decade, ac­cord­ing to in­de­pen­dent analy­ses by the Con­gres­sional Bud­get Of­fice and the con­gres­sional Joint Com­mit­tee on Tax­a­tion.

They in­clude most of the ma­jor taxes en­acted in the 2010 health law to fund the law’s pro­gram for ex­tend­ing health in­sur­ance to more than 20 mil­lion pre­vi­ously unin­sured Amer­i­cans.

On the chop­ping block are taxes on med­i­cal de­vice mak­ers and health in­sur­ance plans, which to­gether ac­count for about $165 bil­lion in tax cuts over the next decade.

Cou­ples mak­ing more than $250,000 a year and sin­gle tax­pay­ers mak­ing more than $200,000 would see two tax cuts, in­clud­ing one on in­vest­ment in­come, that the bud­get of­fice es­ti­mated would cost the fed­eral govern­ment nearly $300 bil­lion over the next decade. (That es­ti­mate may be re­vised down as House Repub­li­cans de­layed one of the tax cuts in the fi­nal ver­sion of their bill.)

Also elim­i­nated would be a host of lim­its on tax-free spend­ing ac­counts that many Amer­i­cans use for med­i­cal ex­penses. Repub­li­cans ar­gue that these taxes are un­nec­es­sary and even un­der­mine ef­forts to con­trol health­care costs.

“It’s bad for eco­nomic growth,” House Speaker Paul D. Ryan (R-Wis.) told Fox News dur­ing the House de­bate.

The tax on health plans, for ex­am­ple, is widely seen as con­tribut­ing to higher pre­mi­ums, as in­sur­ers cus­tom­ar­ily pass the costs along to con­sumers.

But elim­i­nat­ing so many taxes isn’t cheap.

So the Repub­li­can health­care bill — known as the Amer­i­can Health Care Act — slashes hun­dreds of bil­lions of dol­lars in fed­eral health­care spend­ing, in­clud­ing an es­ti­mated $880 bil­lion for Med­i­caid, the state-run health plan for the poor that cov­ers more than 70 mil­lion Amer­i­cans.

That would in ef­fect cut fed­eral Med­i­caid spend­ing by more than a quar­ter over the next decade, an un­prece­dented re­duc­tion that in­de­pen­dent analy­ses sug­gest would force states to sharply limit cov­er­age for poor pa­tients.

The House bill would also re­duce in­sur­ance sub­si­dies to low- and mod­er­ate-in­come Amer­i­cans who get health plans through Oba­macare mar­ket­places such as Health­Care.gov.

The re­duc­tion in fed­eral aid would, in turn, dra­mat­i­cally in­crease the num­ber of unin­sured Amer­i­cans. Over­all, the Con­gres­sional Bud­get Of­fice has es­ti­mated that 24 mil­lion fewer peo­ple would have health cov­er­age by 2026 un­der the orig­i­nal ver­sion of the House bill.

By con­trast, the wealth­i­est Amer­i­cans stand to get a large tax break. By 2023, fam­i­lies mak­ing more than $1 mil­lion would see their taxes de­crease by an av­er­age of more than $50,000, an anal­y­sis by the in­de­pen­dent Ur­ban-Brook­ings Tax Pol­icy Cen­ter sug­gests.

That means that in a coun­try of more than 300 mil­lion peo­ple, nearly half of all the tax breaks in the House bill would go to only about 780,000 house­holds.

The com­bi­na­tion of tax breaks for wealthy Amer­i­cans and his­toric re­duc­tions in as­sis­tance to low-in­come pa­tients has fu­eled wide­spread crit­i­cism of the House GOP leg­is­la­tion, par­tic­u­larly on the left.

“The math is pretty clear,” said Ed­win Park, vice pres­i­dent for health pol­icy at the lib­eral Cen­ter on Bud­get and Pol­icy Pri­or­i­ties. “They are sharply cut­ting Med­i­caid and in­sur­ance sub­si­dies to pay for tax cuts.”

Whether GOP se­na­tors will be able to mod­er­ate the re­duc­tions in health­care as­sis­tance re­mains un­clear.

The early ver­sion of the House bill was pro­jected to re­duce the fed­eral deficit by about $150 bil­lion over the next decade, ac­cord­ing to the Con­gres­sional Bud­get Of­fice anal­y­sis.

That num­ber has prob­a­bly shrunk slightly, as House Repub­li­cans added more spend­ing to the leg­is­la­tion be­fore it passed. An up­dated bud­get anal­y­sis is ex­pected next week.

But un­der the bud­get rules adopted by GOP law­mak­ers this year, Se­nate Repub­li­cans will not be able to add any spend­ing into their leg­is­la­tion with­out en­act­ing cuts else­where or shrink­ing the tax cuts fur­ther.

That is be­cause, ac­cord­ing to those rules, their bill must re­duce the deficit by as least as much as the House bill.

Jac­que­lyn Martin As­so­ci­ated Press

PRE­SERV­ING cov­er­age for mil­lions of Amer­i­cans could force Ma­jor­ity Leader Mitch McConnell, cen­ter, and other GOP se­na­tors to dial back tax cuts.

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