Se­nate GOP tax bill also takes aim at Oba­macare

New pro­vi­sion to end in­surance man­date may threaten plan.

Los Angeles Times - - FRONT PAGE - By Lisa Mas­caro and Jim Puz­zanghera

WASHINGTON — Se­nate Repub­li­cans took a big gam­ble Tues­day with their tax re­form bill, adding a par­tial Oba­macare re­peal pro­vi­sion that would free up more money for tax cuts, but also in­ject sig­nif­i­cant new po­lit­i­cal hur­dles.

The change, backed by Pres­i­dent Trump and a hand­ful of se­na­tors, would end the man­date un­der the Af­ford­able Care Act that all Amer­i­cans have health cov­er­age. Se­nate GOP lead­ers had pre­vi­ously re­jected the idea as too risky to in­clude in their tax pack­age, par­tic­u­larly af­ter the re­peated failed ef­forts ear­lier this year to re­peal and re­place the 2010 law.

Re­peal­ing the man­date would save the gov­ern­ment an es­ti­mated $338 bil­lion over 10 years, but only be­cause mil­lions of peo­ple would stop buy­ing in­surance and there­fore would no longer re­ceive sub­si­dies to help pay for their pre­mi­ums.

Look­ing for a way to fund their am­bi­tious tax plan and un­der fire for giv­ing most of the breaks to cor­po­ra­tions and the wealthy, Se­nate Repub­li­cans made a last-minute de­ci­sion to insert the Oba­macare re­peal. They plan to use the sav­ings to pay for ad­di­tional tax cuts for mid­dle- and up­per-class Amer­i­cans.

“It’ll be dis­trib­uted in the form of mid­dle-in­come tax re­lief,” said Sen. John Thune of South Dakota, the thir­drank­ing Repub­li­can.

It re­mains to be seen whether Se­nate lead­ers can muster the 50 votes needed from their own party to pass

the new ver­sion, though they ex­pressed con­fi­dence. “We’re op­ti­mistic that in­sert­ing the in­di­vid­ual man­date re­peal would be help­ful,” Se­nate Ma­jor­ity Leader Mitch McCon­nell (R-Ky.) said.

As a pos­si­ble con­ces­sion to lure cen­trist Repub­li­cans who sank pre­vi­ous ef­forts to re­peal the health­care law, Se­nate lead­ers in­di­cated they would move ahead with a bi­par­ti­san health­care com­pro­mise bill worked out by Sens. La­mar Alexan­der (R-Tenn.) and Patty Mur­ray (D-Wash.) that is in­tended to sta­bi­lize the health­care mar­kets. “We’re com­mit­ted to mov­ing Alexan­der-Mur­ray,” Thune said.

But by in­sert­ing health­care into the tax de­bate, Repub­li­cans risked re­ac­ti­vat­ing op­po­si­tion from the coali­tion of health­care groups that helped quash their ear­lier re­peal ef­forts.

On Tues­day, 16 lead­ing con­sumer and pa­tient groups to­gether ex­pressed alarm at the pro­posal. “Re­peal­ing the in­di­vid­ual man­date with­out oth­er­wise in­creas­ing ac­cess to ad­e­quate, af­ford­able health in­surance is a step back­ward for in­di­vid­u­als and fam­i­lies,” noted the groups, which in­clude the Amer­i­can Heart Assn., the Amer­i­can Lung Assn., the March of Dimes, Con­sumers Union and the ad­vo­cacy arm of the Amer­i­can Can­cer So­ci­ety.

Democrats called it a des­per­ate move that would re­sult in 13 mil­lion ad­di­tional unin­sured Amer­i­cans and pre­mium hikes of 10%, ac­cord­ing to non­par­ti­san analy­ses of the im­pact of end­ing the man­date.

“Repub­li­cans just can’t help them­selves,” said Se­nate Mi­nor­ity Leader Charles E. Schumer (D-N.Y.). “If the Amer­i­can peo­ple weren’t al­ready outraged by this [tax] bill, in­ject­ing health­care into it will cer­tainly do the trick.”

The House tax bill, which is ex­pected to pass later this week, does not in­clude the Oba­macare pro­vi­sion, though end­ing the man­date is pop­u­lar among House Repub­li­cans. ended up re­tain­ing prop­erty tax de­duc­tions up to $10,000 af­ter law­mak­ers from New York and New Jer­sey ob­jected.

Some key GOP se­na­tors also voiced con­cerns that their plan did not do enough to help the mid­dle class. “Mid­dle-in­come tax­pay­ers are go­ing to be re­ally hurt by re­peal of the SALT,” said Sen. Su­san Collins (RMaine), us­ing the acro­nym for state and lo­cal tax de­duc­tions.

The idea to insert the Oba­macare man­date re­peal is in­tended as a com­pro­mise. Repub­li­can se­na­tors have ar­gued it makes sense to in­clude it in tax pol­icy be­cause the man­date was up­held by the Supreme Court in 2012 by declar­ing it a tax. Sens. Tom Cot­ton (R-Ark.) and Rand Paul (R-Ky.) were among those who had spo­ken with Trump about in­clud­ing it.

The sav­ings could be used to push down rates. Trump sug­gested Mon­day on Twit­ter us­ing it to lower the top tax rate for the rich­est Amer­i­cans from 38.5% in the Se­nate bill to 35%, and then us­ing “the rest” for mid­dle-in­come fam­i­lies.

“It makes too much sense,” said Sen. John Kennedy (R-La.). “You could use it to give re­lief to those mid­dle­and up­per mid­dle-class tax­pay­ers who are not get­ting as much re­lief as they should be­cause of [the elim­i­na­tion of the state and lo­cal tax] de­duc­tion.”

But while most Repub­li­cans sup­port get­ting rid of the Af­ford­able Care Act in­di­vid­ual man­date and have cam­paigned on the is­sue for years, in­sert­ing it now could back­fire. Some, in­clud­ing Collins, are con­cerned that re­peal would cause too much dis­rup­tion in health in­surance mar­kets.

A some­what sim­i­lar idea, the so-called skinny Oba­macare re­peal, failed to garner enough Repub­li­can sup­port in the Se­nate in July when Collins joined GOP Sens. John McCain of Ari­zona and Lisa Murkowski of Alaska to vote no.

In­de­pen­dent analy­ses by the Con­gres­sional Bud­get Of­fice and oth­ers sug­gest that with­out some kind of penalty, many healthy Amer­i­cans would not get in­surance un­til they were sick. That would push up health in­surance costs, caus­ing what peo­ple in the busi­ness call a “death spi­ral.”

Sev­eral states ex­pe­ri­enced just this kind of mar­ket col­lapse when they tried guar­an­tee­ing their res­i­dents cov­er­age with­out any kind of re­quire­ment that all peo­ple — in­clud­ing the young and healthy — get cov­er­age.

Schumer in­di­cated Tues­day that Democrats may try to peel off GOP sup­port for the tax bill by with­hold­ing their votes on the Alexan­der-Mur­ray bi­par­ti­san mea­sure, a key part of win­ning over Repub­li­can mod­er­ates.

While Se­nate pas­sage of the tax bill can be done on a strictly par­ti­san vote un­der spe­cial bud­get rules, Demo­cratic votes would be needed to ap­prove the Af­ford­able Care Act fix.

“We should pass the Alexan­der-Mur­ray com­pro­mise,” Schumer said. “We don’t need to trade it for a tax bill and we won’t.”

J. Scott Applewhite Associated Press

SEN. RON WY­DEN of Ore­gon, the top Demo­crat on the Se­nate Fi­nance Com­mit­tee, dis­cusses the Repub­li­can tax bill this week. Democrats crit­i­cized the ef­fort to add a health­care pro­vi­sion to the leg­is­la­tion.

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