Se­nate GOP seeks to end part of ACA in tax bill

Plan’s changes also set cuts in in­di­vid­ual in­come rates to ex­pire in 2025


Se­nate Repub­li­can lead­ers moved Tues­day to in­clude a re­peal of the Af­ford­able Care Act’s in­di­vid­ual man­date in their tax bill, a ma­jor change of strat­egy as they try to ac­com­plish two of their top do­mes­tic pri­or­i­ties in a sin­gle piece of leg­is­la­tion.

They also an­nounced that the in­di­vid­ual tax cuts in the plan would be made tem­po­rary, ex­pir­ing at the end of 2025 to com­ply with Se­nate rules lim­it­ing the im­pact of leg­is­la­tion on the longterm deficit. A cor­po­rate tax cut, re­duc­ing the rate from 35 to 20 per­cent, would be left per­ma­nent.

The changes in­tro­duce volatile vari­ables into what was al­ready a chal­leng­ing po­lit­i­cal enterprise for Repub­li­cans. And it’s un­clear whether they will help or hurt the bill’s chances.

Re­peal­ing the man­date, which com­pels most Amer­i­cans to buy health in­sur­ance or pay a fine, would free up more than $300 bil­lion in gov­ern­ment fund­ing over the next decade that Repub­li­cans could use to fi­nance their pro­posed tax cuts, but it would re­sult in 13 mil­lion fewer peo­ple hav­ing health in­sur­ance, ac­cord­ing to pro­jec­tions from the non­par­ti­san Con­gres­sional Bud­get Of­fice.

The CBO has also pro­jected that re­peal­ing the in­di­vid­ual man­date would drive up in­sur­ance pre­mi­ums for many Amer­i­cans by roughly 10 per­cent.

Elim­i­nat­ing the in­di­vid­ual

man­date and hav­ing far fewer peo­ple signed up for in­sur­ance saves money be­cause many of those peo­ple re­ceive fed­eral sub­si­dies to buy cov­er­age. Se­nate lead­ers are us­ing those sav­ings to ad­dress the con­cerns of anx­ious mem­bers from across their cau­cus who com­plained that the tax plan’s ben­e­fits for the mid­dle class were too mod­est com­pared with ben­e­fits re­ceived by the wealthy and cor­po­ra­tions.

Changes to the bill re­leased Tues­day night by the Se­nate Fi­nance Com­mit­tee in­di­cated that the sav­ings would be used in part to al­low in­di­vid­u­als to claim a larger $2,000 child tax credit, a pri­or­ity of Ivanka Trump, the pres­i­dent’s daugh­ter. They would also be used to mod­estly re­duce in­come tax rates for mid­dle-in­come tax­pay­ers.

Se­nate Repub­li­cans also are seek­ing to de­liver ex­panded ben­e­fits to “pass-through” firms that send prof­its to their own­ers to be taxed as in­di­vid­ual in­come.

“We’re op­ti­mistic that in­sert­ing the in­di­vid­ual man­date re­peal would be help­ful,” Se­nate Ma­jor­ity Leader Mitch McCon­nell (R-Ky.) said Tues­day af­ter meet­ing with party mem­bers dur­ing a closed-door lunch.

At the same time, by mak­ing the in­di­vid­ual in­come tax cuts tem­po­rary, Se­nate lead­ers are seek­ing to en­sure that the bill does not vi­o­late the cham­ber’s rules that pro­hibit leg­is­la­tion passed with fewer than 60 votes from rais­ing the deficit af­ter 10 years.

But while solv­ing some prob­lems, the changes Tues­day threaten new po­lit­i­cal prob­lems of their own.

The at­tack on for­mer pres­i­dent Barack Obama’s sig­na­ture leg­isla­tive achieve­ment is likely to rule out the al­ready slim pos­si­bil­ity of sup­port from Democrats, and the prospect of adding mil­lions to the ranks of the unin­sured could trouble mod­er­ate Repub­li­cans who voted down pre­vi­ous re­peal ef­forts.

Sen. Su­san Collins (R-Maine), one of the Repub­li­cans who op­posed ear­lier at­tempts to roll back the health-care law, said Tues­day that in­clud­ing the re­peal mea­sure “com­pli­cates” the tax ef­fort. But she sug­gested she might be able to sup­port it if the Se­nate also passes a bi­par­ti­san bill to pre­serve other as­pects of the Af­ford­able Care Act.

Sen. John McCain (R-Ariz.), who along with Collins and Sen. Lisa Murkowski (R-Alaska) voted down an Af­ford­able Care Act re­peal ef­fort this sum­mer, de­clined to say whether he would back a tax bill that in­cluded re­peal.

“I want to look at the bill in its en­tirety be­fore you start pluck­ing out parts of it to see whether I sup­port it or not,” he said Tues­day in the Capi­tol.

Repub­li­cans con­trol 52 votes of the 100-seat Se­nate, so the defection of three mem­bers would im­peril any changes to the bill. Repub­li­cans are try­ing to pass the tax-cut bill through a process known as rec­on­cil­i­a­tion, which re­quires only 50 votes — plus a tiebreak­ing vote from Vice Pres­i­dent Pence — to pass the bill.

The Se­nate Fi­nance Com­mit­tee hopes to move a bill to the full Se­nate floor this week, with the en­tire cham­ber vot­ing on it af­ter Thanks­giv­ing. The House plans to vote on its own ver­sion of the bill — which does not con­tain the in­di­vid­ual man­date re­peal or the sun­set­ting of the in­di­vid­ual tax pro­vi­sions — this week.

Sen­a­tors con­cerned about re­strain­ing na­tional debt — long one of the top goals for the GOP — may also raise howls about the plan to sun­set the in­di­vid­ual in­come tax cuts in 2025. Congress is un­likely to al­low a large tax in­crease on tax­pay­ers at that point, which could mean a big hit to the deficit over the long run.

Pence praised the re­peal ef­fort Tues­day at a Wall Street Jour­nal event in Wash­ing­ton, not­ing that Pres­i­dent Trump is a vo­cal sup­porter of the ef­fort and say­ing that the man­date’s elim­i­na­tion would amount to a tax cut for the mid­dle class.

Re­peal­ing the in­di­vid­ual man­date would un­der­mine the Af­ford­able Care Act’s sys­tem for at­tempt­ing to get low-in­come peo­ple and other in­di­vid­u­als into pri­vate health in­sur­ance plans. The health-care law banned in­sur­ance com­pa­nies from dis­crim­i­nat­ing against peo­ple with pre­ex­ist­ing health con­di­tions. But to pre­vent peo­ple from wait­ing to buy in­sur­ance un­til they got sick, the law also im­posed fi­nan­cial penal­ties for in­di­vid­u­als who did not main­tain cov­er­age.

A pow­er­ful group of stake­hold­ers, in­clud­ing the ma­jor health in­sur­ance and hos­pi­tal in­sur­ance lob­bies and two in­flu­en­tial doc­tors’ groups, wrote a let­ter to lead­ers of both par­ties ar­gu­ing that they should re­tain the in­di­vid­ual man­date.

“There will be se­ri­ous con­se­quences if Congress sim­ply re­peals the man­date while leav­ing the in­sur­ance re­forms in place: mil­lions more will be unin­sured or face higher pre­mi­ums, chal­leng­ing their abil­ity to ac­cess the care they need,” the groups wrote.

Broadly, both the Se­nate bill and House bill would sharply cut the cor­po­rate tax rate and cut in­come tax rates for in­di­vid­u­als, while seek­ing to fi­nance those cuts by elim­i­nat­ing or scal­ing back some pop­u­lar tax de­duc­tions. What the de­duc­tion roll­backs don’t cover would be fi­nanced by $1.5 tril­lion in deficit spend­ing over a decade.

The House and Se­nate bills would lower taxes for many Amer­i­cans, but non­par­ti­san an­a­lysts have con­cluded that the elim­i­na­tion of cer­tain de­duc­tions would have mil­lions pay higher taxes, par­tic­u­larly if they live in states such as New York, New Jer­sey or Cal­i­for­nia.

The House and Se­nate must pass match­ing ver­sions of the tax-cut bill for Trump to be able to sign them into law. The House bill does not in­clude a re­peal of the in­di­vid­ual man­date.

House con­ser­va­tives mounted a last-ditch ef­fort Tues­day to in­clude a re­peal be­fore the full cham­ber votes on the bill, sched­uled for Thurs­day. Rep. Mark Walker (R-N.C.), the leader of the Repub­li­can Study Com­mit­tee, hud­dled in the of­fice of House Speaker Paul D. Ryan (R-Wis.) Tues­day af­ter­noon with House Rules Com­mit­tee Chair­man Pete Ses­sions (R-Tex.), whose panel will make any fi­nal changes to the bill Tues­day night be­fore it heads to the floor.

But House GOP aides who were not au­tho­rized to speak pub­licly on the in­ter­nal dis­cus­sions said GOP lead­ers are loath to make such a ma­jor change to the bill at this late stage and pre­fer to see whether the Se­nate could pass a bill with the re­peal pro­vi­sion be­fore bring­ing the is­sue up in the House.

In the Se­nate, the sud­den shift in the tax bill threat­ens to un­der­mine a com­pro­mise health mea­sure ne­go­ti­ated be­tween Sens. Patty Mur­ray (D-Wash.) and La­mar Alexan­der (R-Tenn.). The agree­ment would re­sume pay­ments that help low-in­come Amer­i­cans af­ford health in­sur­ance, which the Trump ad­min­is­tra­tion halted in Oc­to­ber.

To win sup­port for the up­dated tax bill, the Se­nate could take up the Alexan­der-Mur­ray bill along­side it, ac­cord­ing to Sens. John Thune (R-S.D.) and Bob Corker (R-Tenn.). The bills can­not be com­bined un­der the rules of rec­on­cil­i­a­tion.

Se­nate Mi­nor­ity Leader Charles E. Schumer (D-N.Y.) said in­clud­ing a re­peal of the man­date in the tax bill would tor­pedo Demo­cratic sup­port for the Mur­ray-Alexan­der com­pro­mise.

“We don’t need to trade it for a tax bill, and we won’t,” he said.

And Mur­ray, the top Demo­crat on the Se­nate Health, Ed­u­ca­tion, La­bor and Pen­sions Com­mit­tee, told re­porters she was stunned that Repub­li­cans would again seek to undo the Af­ford­able Care Act.

“The elec­tions last week clearly showed that the Amer­i­can peo­ple are pay­ing at­ten­tion, and they don’t want their health care taken away,” Mur­ray said, ref­er­enc­ing a string of state-level elec­tions in Vir­ginia, New Jer­sey and else­where in which Democrats trounced Repub­li­cans. “I don’t think [Repub­li­cans are] lis­ten­ing.”


Se­nate Ma­jor­ity Leader Mitch McCon­nell (R-Ky.) said adding a par­tial Af­ford­able Care Act re­peal would help the GOP tax bill pass.

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