The House Ways and Means and Energy and Commerce committees March
9 approved legislation that would replace the Affordable Care Act and repeal
many of its taxes. Lawmakers in the Senate and House expect more changes to be
made to legislation
The American Health Care Act, approved on Republican-only yes
votes, has nevertheless drawn significant criticism from a number of
Republicans on both sides of Capitol Hill as well as those on the Democratic
side of the aisle. Republican protests center on the creation of advanceable,
refundable tax credits to buy health insurance, the failure to fully repeal all
of the ACA's taxes and the failure to insure that those who currently qualify
for Medicaid will continue to receive coverage.
Ways and Means approved its language in a 23-16 vote along party
lines, rejecting Democratic calls to postpone the markup. Energy and Commerce
then cleared its health care bill by a vote of 31-23 after a 27-hour session
that saw tempers flare as Democrats on that panel tried to delay the
legislation.
The House Budget Committee will blend the two committee bills, and
that legislation will go through the Rules Committee process before heading to
the House floor for a vote. If the measure clears the House, it will move to
the Senate for approval.
Repealing the tax provisions funding the Affordable Care Act will
cost the government at least $593.7 billion over the next decade, according to
the Joint Committee on Taxation. That figure does not include the revenue loss
from several provisions, including funds tied to repealing the individual and
employer mandates to buy health coverage. Those revenue scores will come from
the Congressional Budget Office, which has not yet released those numbers or
the cost of the House Republican plan to replace the health care law.
The repeal of the most of the tax provisions in the ACA will not
have any impact on this filing season but is certain to alter the filing
process in future years, if enacted. A summary of the tax provisions proposed
to be repealed, together with links to the Joint Tax Committee document
describing the provision.
Summary of Tax Provisions Repealed in Health Care Bill
|
TAX
TO BE REPEALED
|
COST
|
REPEAL
DATE
|
JCT
DOCUMENT
|
|
Net investment income tax: 3.8 percent
tax on investments for high-earning taxpayers
|
$157.6 billion
|
2018
|
|
|
Fee on health insurance providers:
Annual fee for entities providing coverage
|
$144.7 billion
|
Wouldn't apply starting in 2017
|
|
|
Medicare tax increase: Tax of 0.9
percent on earned income greater than $200,000 for individuals/$250,000 for a
couple
|
$117.3 billion
|
Was set to begin in 2018, repealed
|
|
|
"Cadillac tax": Surcharge on
high-cost health plans
|
$48.7 billion
|
Repealed for 2016 through Jan. 1, 2025
(applies for taxable periods after Dec. 31, 2024)
|
|
|
Higher medical expense deduction
threshold: 10 percent threshold for elderly taxpayers and for alternative
minimum tax purposes
|
$34.9 billion
|
Lowers floor to 7.5 percent in 2017 for
elderly taxpayers, 2018 for AMT filers.
|
|
|
Annual fee on branded prescriptions:
Applies to manufacturers and importers
|
$24.8 billion
|
Dec. 31, 2017
|
|
|
Medical device tax: 2.3 percent excise
tax on manufacturers and importers
|
$19.6 billion
|
Dec. 31, 2017
|
|
|
Limitation on health flexible spending
arrangements: Applies to cafeteria plans
|
$18.6 billion
|
Dec. 31, 2017
|
|
|
Tax increase on health savings
accounts: Maximum contribution limit to HSA increased to amount of deductible
and out-of-pocket limitation
|
$18.6 billion
|
Repeal effective on distributions after
Dec. 31, 2017
|
|
|
Over-the-counter medication exclusion:
Nonprescribed over-the-counter medicines not permitted as medical expenses
for HSAs
|
$5.5 billion
|
Dec. 31, 2017
|
|
|
Tanning tax: 10 percent tax on retail
tanning services
|
$600 million
|
2018
|
|
|
Deduction for high-paid employees:
$500,000 cap on wage deduction for health insurance executives
|
$400 million
|
Dec. 31, 2017
|
A table providing the estimated revenue effects of all of the tax
provisions considered and approved by the Ways and Means Committee is available
in another Joint Committee on Taxation document, JCX-16-17.
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