Hart Health Strategies provides a comprehensive policy briefing on a weekly basis. This in-depth health policy briefing is sent out at the beginning of each week. The health policy briefing recaps the previous week and previews the week ahead. It alerts clients to upcoming congressional hearings, newly introduced bills, regulatory announcements, and implementation activity related to the Patient Protection and Affordable Care Act (PPACA) and other health laws.


Tax Reform Passes House, Advances in Senate

The House of Representatives passed legislation to overhaul the tax code by a vote of 227-205 last week. No Democrats voted in favor of the bill, and 13 Republicans voted in opposition. The House bill does not include repeal of the Affordable Care Act’s (ACA) individual mandate. Speaker of the House Paul Ryan (R-Wis.) and Rep. Jenniffer González-Colón have stated that additional tax relief for Puerto Rico following Hurricanes Irma and Maria will be included should the legislation be considered in conference committee with the Senate. GOP leaders hope to send tax reform legislation to the President’s desk by the end of the year.

The Senate Finance Committee advanced its own GOP tax package last week. The plan was approved along a party-line vote of 14-12. The Committee spent four days marking up the bill, which would cut taxes for individuals, reduce the corporate tax rate from 35 percent to 20 percent, and eliminate the individual mandate by reducing the non-compliance penalty to zero effective January 1, 2019. The individual tax cuts would expire after 2025 in order to comply with the budget rules of reconciliation that require the bill to not increase the deficit after 10 years. With 51 votes necessary for passage, the GOP can only afford two Republican defections. Sen. Ron Johnson (R-Wis.) has voiced concerns about the bill due to its treatment of pass-through businesses but has indicated that he would be willing to work with the Committee to address those concerns. Other Republicans have raised concerns about the inclusion of the individual mandate provision and about the bill’s effect on the federal debt. Sen. Lisa Murkowski (R-Alaska) has said that her support may be contingent upon passage of the Alexander-Murray health care compromise that would guarantee continued funding for cost sharing reduction (CSR) payments. Sens. Lindsey Graham (R-S.C.), Lamar Alexander (R-Tenn.), Susan Collins (R-Maine), and Bill Cassidy (R-La.) have met with the President to urge his support for the bipartisan legislation, out of concern that repeal of the individual mandate without the provision of CSR payments will destabilize the individual insurance market. Elimination of the mandate is also opposed by many stakeholders in the health care industry, including the American Hospital Association (AHA), the American Medical Association (AMA), and America’s Health Insurance Plans (AHIP).

In response to a request from Finance Committee Ranking Member Ron Wyden (D-Ore.), the Congressional Budget Office (CBO) released estimates that the Senate tax bill would result in $18 billion less in Medicaid spending, $4 billion less in spending for CSR payments, $1 billion less in spending for the Basic Health Program, and $4 billion more in spending for the Medicare program, due to changes in payments for disproportionate share hospitals (DSH). The CBO has also alerted lawmakers that if they do not pass subsequent legislation to offset the tax bill’s $1.5 trillion deficit increase over the next decade or waive the requirements to provide such offsets, the Office of Management and Budget (OMB) would be required to trigger sequestration cuts. The $136 billion in cuts – required under the law known as “PAYGO” – could amount to $25 billion to the Medicare program in fiscal year (FY) 2018. Republican leadership has indicated that the plan will be to waive the PAYGO requirements (which would require 60 votes) – either as part of the Senate tax package or in subsequent legislation. Given that the sequestration would not go into effect until 15 days after the close of the Congress, such a delay would not adversely affect the implementation of the provisions.

Senate Majority Leader Mitch McConnell (R-Ky.) has said that he will bring the legislation to the floor for further debate when the Senate returns after Thanksgiving recess on November 27. If the Senate is successful in passing the tax bill, the measure will need to be reconciled with the House-passed legislation. The House bill contains some significant differences.

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