VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA Repeal (last updated 3.18.17)
- 1 Arguments For and Against Repeal
- 2 Political Feasibility of Repeal
- 3 Impact of the 2016 Elections
- 4 ACA Replacement Proposals
- 5 Congressional Initiatives to Repeal the ACA
- 6 State Efforts to Repeal Obamacare
- 7 Components of ACA Repealed
- 8 Components of ACA Proposed for Repeal
- 8.1 Overview
- 8.2 Other Components Proposed for Repeal (Ranked by Budgetary Impact)
- 8.2.1 Premium Tax Credits and Cost-Sharing Reductions
- 8.2.2 Employer Mandate
- 8.2.3 Individual Mandate
- 8.2.4 Medicaid Expansion
- 8.2.5 Prevention and Public Health Fund (PPHF)
- 8.2.6 Small Business Tax Credits
- 8.2.7 Premium Tax Credits Overpayments
- 8.2.8 Auto-Enrollment for Certain Large Employers
- 8.2.9 Funding for U.S. Territories
- 8.2.10 Risk Reinsurance
- 8.2.11 Increased Penalties On Nonqualified HSA Withdrawals (Health Savings Account Tax)
- 8.2.12 Limitation of Excessive Remuneration Paid By Certain Health Insurance Providers
- 8.2.13 Excise Tax on Indoor Tanning Services
- 8.2.14 Elimination of Tax Deduction for Medicare Part D Subsidy
- 8.2.15 Codify Economic Substance Doctrine
- 8.2.16 Tax on Over-the-Counter Medications (“Medicine Cabinet Tax”)
- 8.2.17 Independent Payment Advisory Board
- 8.2.18 Medical Device Tax
- 8.2.19 Drug Manufacturers/Importers Tax (Tax on Prescription Medications)
- 8.2.20 Limits On FSA Contributions (“Special Needs Kids Tax”)
- 8.2.21 Medicaid DSH Payment Reductions
- 8.2.22 Raise “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI (Chronic Care Tax)
- 8.2.23 Excise Tax on Comprehensive Health Insurance Plans (Cadillac Tax)
- 8.2.24 Medicare Surtax on Higher-Income Individuals
- 8.2.25 Health Insurance Tax (HIT)
- 8.2.26 Medicare Surtax on Investment Income
- 9 Components of ACA Defunded
- 10 Components of ACA Delayed/Altered
- 11 Components of ACA Not Working Well
- 12 Pending Legal/Constitutional Challenges
- 13 ACA and Public Opinion
- 14 Resources
Arguments For and Against Repeal
The Case for Repeal
- Historical and Constitutional Anomaly. “The law is both a historical and constitutional anomaly. In 2010, the President and his allies in Congress enacted what is arguably the most ambitious social legislation in American history. It directly affects the personal life of every American, and it controls or regulates a complex sector of the American economy that is slightly larger than the entire economy of France. In sharp contrast to the constitutional ideal of a rational deliberation of legislative measures by the elected representatives of the people—the product of genuine compromise and consensus—this health care law was enacted on a narrowly partisan basis, in the face of popular opposition, through a profoundly flawed legislative process. It was an unusual, if not unique, conjunction of bad government and bad policy.” (Robert Moffitt, Heritage Foundation, 4.28.14).
- Contrast with Other Major Domestic Policy Laws. “Medicare, Social Security, and the Civil Rights Act had four things in common that made them iconic: They embodied a popular consensus that was strong if not universal; they were passed by large margins with bipartisan backing, which meant their appeal crossed many factions; they were transparent and easy to follow, so the country and Congress could make informed judgments; and they were passed by the usual order of legislative business. The Affordable Care Act, on the contrary, was passed with public opinion running strongly against it; it was passed by the minimum number of votes in the House, with no Republicans voting for it; it was passed through the Senate via a loophole, as it could not have passed through normal procedures; and it was so complex, convoluted, and incomprehensible that its contents were a mystery both to the voters and the members who passed it, and remained so until last October, three and a half years after it passed.” (Noemie Emery, Weekly Standard 3.3.14).
Unwise and Unworkable
- James C. Capretta and Robert S. Moffitt. How to Replace Obamacare. National Affairs, Spring 2012.
- James C. Capretta and Jeffrey H. Anderson. Delay, Repeal, Replace: The Obamacare fight has just begun. The Weekly Standard, February 4, 2013, Vol. 18, No. 20.
- James Capretta and Yuval Levin. It’s time to delay Obamacare. AE Ideas. April 4, 2013.
- Jim DeMint and Mike Needham. The Only Way to Stop ObamaCare Is to Cut Off Its Funding. WSJ, August 9, 2013.
- Yuval Levin. Delaying Obamacare. National Review Online, July 3, 2013.
- Can Appropriations Bills Defund Obamacare? Factsheet #126 on Health Care, The Heritage Foundation, August 14, 2013
- Megan McArdle. Obamacare Needs a Drop-Dead Date. Bloomberg. October 14, 2013. Argues that exchange rollout glitches have greatly increased the chances of a premium death spiral since only the sickest individuals needing exchange coverage are likely to persist in getting enrolled. Thus, unless the exchanges are functioning far better by early to mid-November, it would be best to delay them for a year until the problem can be fixed.
- Philip Klein. What if President Obama decides Obamacare should be delayed? Washington Examiner, October 17, 2013. Points out that if the president decided to delay the law for a year, it’s not certain Republicans necessarily would permit him to do so.
- Sarah Kliff. HealthCare.gov is still terrible. Should Obama delay the individual mandate? Washington Post Wonkblog, October 18, 2013. Explains the complexities that would arise were the individual mandate delayed.
The Case Against Repeal
Adverse Effects on Individuals
- Robert Laszewski has articulated the political case against full repeal, mostly centered on concerns that this would take away benefits for millions of Americans:
- Medicaid expansion. Most Republican alternatives would “not expand” Medicaid — presumably rolling back the Medicaid expansion in each of the 24 states that have expanded it. By year-end, millions of Americans will have gained coverage.
- Insurance subsidies. Some Republican alternatives would offer health insurance premium subsidies for people up to 300% of poverty, whereas ACA offers subsidies up to 400% of the poverty level; therefore many people would lose their subsidies — and they would be the voters who are solidly middle class.
- Tax exclusion for employer-based health insurance. Many Republican alternatives would cap the tax exclusion, e.g., at 65% of the cost of the “average” cost of a policy. Democrats will are likely to characterize this as a huge middle class tax increase.
- Lower premiums for older people. Even though ACA’s age rating requirement has been controversial, the people it benefits–older people–tend to be much more likely to vote than younger voters. Changing from the 3:1 premium restriction on age rating to 5:1 or 6:1, as some alternatives propose, will make premiums higher for older individuals.
- Prohibition of pre-existing condition provisions. As of January 1, 2014, there is no such thing in America any longer. But some Republican proposals would bring the provision back if people did not maintain continuous coverage.
- Republicans Wouldn’t Scrap the Main Driver of ACA Rate Shock. ”It’s true that for healthy people who were buying insurance in the individual market prior to the ACA, the law’s coverage rules substantially drove up the premium price. Rate shock is a real phenomenon…The prime driver is guaranteed issue — the prohibition against varying the price or scope of insurance on the basis of the buyer’s health and medical history….Recently, Sabrina Siddiqui and Sam Stein demonstrated that many of the House Republicans who claim they want to ‘repeal and replace’ the ACA declare their support for guaranteed issue (or some unspecified means of providing affordable coverage for those with pre-existing conditions) on their websites.” Also cites a March 2013 Milliman analysis of factors increasing premiums in California. (XPostFactoid, 5.1.14)
Adverse Effects on Industry
- U.S. Healthcare Executives Say Obamacare is Not Going Anywhere. “Top executives who gathered in San Francisco this week for the annual J.P. Morgan Healthcare conference, say that while President Obama’s signature domestic policy achievement may well be tweaked, it is too entrenched to be removed…For private health insurers and hospitals, the addition of millions of new covered patients has helped buoy their profits. Drugmakers have benefited from the increase in the number of patients eligible for reimbursement of prescription medications.” (Reuters, 1.15.15)
Political Feasibility of Repeal
Many view full repeal as not feasible so long as President Obama remains in office; here are three principal reasons.
- Barrier #1: Senate Filibuster. First, a repeal bill would be incapable of surviving a Senate filibuster. Some have argued that repeal could be achieved using a budget reconciliation bill (which cannot be filibustered), but there is a fierce debate whether the Senate Parliamentarian would allow this given that there are important components of the ACA that do not have significant budgetary implications. Fixing the filibuster (see Barnett and Cost proposal below) would circumvent the reconciliation issue.
- Barrier #2: Lack of Consensus Replacement Plan. However, it is not clear such a bill could secure a majority of Republican votes if there were not a viable replacement plan. Especially in an election year, some Republican members of Congress would be reluctant to leave many millions of Americans newly uncovered.
- Barrier #3: Presidential Veto. Third, even if a full repeal bill could somehow survive the budget reconciliation process or secure passage following a change to filibuster rules, it is inconceivable that there would be enough votes in the Senate or House to obtain the two-thirds vote required to override the President’s veto.
The foregoing calculation hypothetically could change if there were a consensus on a viable ACA replacement plan. There are numerous such plans that have been advanced, but no apparent consensus about which to pursue. It seems improbable a consensus could be achieve in an election year. Moreover, even if that hypothetically happened, it might seem pointless with President Obama having only a few remaining months in office. Politically, it might make more sense for Republicans to retain the ACA as an election issue, especially given the extent to which public opposition to the ACA appears to have been a factor in their enormous political success in the last three election cycles (see ACA and Elections). Assuming a Republican presidential victory, this would pave the way for repeal in 2017 unencumbered by veto concerns.
Thus, much of the debate among Republicans concerns how much to repeal, defund or delay the ACA between now and then. Those favoring full repeal are concerned that partial steps to get rid of the least popular provisions may diminish enthusiasm for full repeal in 2017 or beyond. Others argue that between now and 2017 is a useful period for test-driving what might be feasible using the reconciliation process. But there is no consensus about whether that “test-drive” should entail an effort at full repeal or just the components that have an indisputable budgetary impact.
- Gramm, Phil and Michael Solon. Wall Street Journal (12.20.15). “The Affordable Care Act also grants substantial flexibility in its implementation, a feature Mr. Obama has repeatedly exploited. The new president could suspend penalties for individuals and employers, enforce income-verification requirements, ease the premium shock on young enrollees by adjusting the community rating system, allow different pricing structures inside the exchanges and alter provider compensation. These actions could begin dismantling the most pernicious parts of ObamaCare and prevent its roots from deepening as Congress debates its repeal and replacement.”
- Roll Call. Alexander Says ‘Step-By-Step’ Process Only Way to Change Obamacare. (12.18.15) “The way to change Obamacare in the coming years will be through bipartisan adjustments, one of the Senate GOP leaders on health policy said Thursday. ‘I think over the next four or five years it’ll be changed step-by-step toward a health care system with more freedom for people to find policies, more choices and hopefully lower prices,’ Lamar Alexander, chairman of the Senate Health, Education, Labor and Pensions Committee, said Thursday when asked about the future of the health care law. Republicans have worked to use the budget reconciliation process to get a broader rollback prepared to be able to get to President Barack Obama’s desk, but that amended measure will face a certain veto when cleared through the House… ‘the design of his health care law was a bad idea. It expanded a health care system that already cost too much. It told people that Washington knows better than you what policy you ought to buy. You might want a lower-cost policy that fits your budget and fits your health care needs, Washington’s saying, No, you can’t do it.’”
- Barnett, Randy and Jay Cost. Fix the Filibuster. Weekly Standard (11.2.15). “We believe it is time to reform the filibuster once again. Specifically, it should be eliminated for all appropriations bills and for all judicial nominations, though retained for other legislation. We would also abolish the filibuster for any vote on the repeal of a federal law.”
- Heritage Foundation. Can Appropriations Bill Defund Obamacare? Heritage Foundation Factsheet, August 2013. After citing numerous examples, the author concludes: “it is beyond dispute that Congress can use its power of the purse to defund Obamacare—both its mandatory and discretionary spending—in appropriations legislation this fall. The lone remaining question is whether Congress can summon the political will to do so.”
Impact of the 2016 Elections
With the November election of Donald Trump to the Presidency and Republican control of both the House and the Senate, ACA repeal was increasingly seen as likely. In early March 2017, House leadership introduced the American Health Care Act, which, although not a repeal proposal, significantly alters the ACA. See American Health Care Act below.
Budgetary Impact of 2017 Repeal
- How to Repair ObamaCare’s Fiscal Damage. “In a comprehensive study soon to be released by the Mercatus Center at George Mason University, I estimate that repealing all of the ACA’s new spending and tax provisions going into effect next year could cumulatively reduce federal deficits by more than $1 trillion from 2017-26.” Blahous, Charles. (Wall Street Journal, 3.16.17)
- Don’t Panic Over the CBO Repeal Report. “The Congressional Budget Office (CBO), at the request of Senate Democrats, recently released a report estimating the effects of a reconciliation bill passed in 2015 but vetoed by President Obama (HR 3762). The predicted results are dire but no one should pay too much attention. No one is proposing re-passing HR 3762 without other measures and CBO’s predictions are simply not believable… Attributing such massive changes to individual mandate repeal is unbelievable. The chief architect of the ACA, economist Jonathan Gruber, has reported that the individual mandate had no significant effect on increasing coverage — eliminating it should have minimal effect. The mandate is riddled with exceptions that allow people to avoid buying insurance. The mandate also does little to motivate insurance purchase because penalties for failing to obtain coverage are low compared to insurance premiums. The IRS reports that during the 2016 tax season 11 million people claimed exemptions and 5.6 million people paid an average penalty of $442 – far less than the cost of insurance.” (RealClearHealth, 1.26.17)
Projected Number Losing Coverage
ACA proponents maintain that upwards of twenty million Americans will lose coverage if the ACA is repealed under President Trump. Researchers at the Urban Institute (December 2016) went as far as to predict that 29.8 million people would become uninsured. However the researchers scored a previous repeal bill (H.R. 3762), not a 2017 repeal bill. Others approached potential impact by exploring how many Americans were actually newly covered by the ACA.
Items are in reverse chronological order.
- Heritage Expert on Obamacare Enrollment. “He testified that the growth of Obamacare enrollment is due primarily to Medicaid expansion, rather than private insurance. Haislmaier provided data confirming that the net growth of enrollment, from 2014 to 2015 under Obamacare, is only 14 million (not the reported 20 million), and that Medicaid is accountable for roughly 84 percent of that number. Haislmaier said it is reasonable to project that over a three-year period health insurance enrollment will have expanded by roughly 16.5 million individuals, of which 13.8 million are attributable to public coverage through Medicaid. ‘[Medicaid] has increased the number of people covered by individual market insurance, but a lot of that has been offset by a decline in employer provided insurance, and it has principally produced enrollment increases through an expansion of public programs particularly Medicaid, and particularly the states that adopted the ACA expansion to able bodied adults.’” (Heritage Foundation, 1.31.17)
- Why Obamacare’s ‘20 Million’ Number Is Fake. “The Obama administration claims 20 million more Americans today have health care due to Obamacare. The reality is that when you look at the actual net gains over the past two years since the program was fully implemented, the number is 14 million, and of that, 11.8 million (84 percent) were people given the ‘gift’ of Medicaid. And new research shows that even fewer people will be left without insurance after the repeal of Obamacare. Numbers are still being crunched, but between statistics released by the Congressional Budget Office and one of the infamous architects of Obamacare, the Massachusetts Institute of Technology’s Jonathan Gruber, it’s estimated that anywhere from 2 to 7 million people now on Medicaid would have qualified for the program even without Obamacare.” (Daily Signal, 1.13.17)
- How Many are Newly Insured as a Result of the ACA? Comparison of CBO, Medicaid Actuaries, MACPAC, KFF, and RAND estimates. “The chart below shows the estimates of the number of people that are newly insured as a result of various provisions of the ACA. While the average estimate shows 20.85 million people have benefitted from the ACA, it is important to note that some people currently enrolled in Medicaid could have enrolled in Exchange coverage with nearly full subsidization had their state not expanded Medicaid, and would very likely be eligible for whatever new subsidy structure might replace the current system. Many of those benefitting from the ‘under age 26’ provision likely have offers of insurance of their own that they are currently forgoing because it is easier to have their parents pay their premiums. Regarding those in the Individual Market, not all of these individuals are receiving subsidies and would therefore not be financially impacted by the repeal. Finally, at least a few million people are believed to have lost their employer coverage as a result of the ACA, particularly the cost and complexity of the many new regulations. Ultimately, the number of people likely to be negatively impacted by a repeal of the ACA is certainly less than 20 million. Making reasonable assumptions and accounting for those who lost insurance because of the ACA, and setting aside any assistance that would be provided by ACA replacement policies, the number of people who, on net, are potentially at risk of being negatively impacted is likely closer to 13-14 million.” (American Action Forum, 1.4.17)
- Did ObamaCare Add 20 Million To The Insurance Rolls? Not Even Close. “While the White House derived its number using survey data, which it then adjusted, Heritage instead went directly to the sources for enrollment data — Medicaid and private insurers — to see what’s really happened. What they found is that the Obama administration has inflated the ObamaCare coverage number by almost 42%. The actual gain in coverage between 2013 and 2015 was 14 million, Heritage found. That’s close to the Census Bureau’s estimate that the number of uninsured declined by 12.8 million over these years. And of that, only 2.2 million gained private coverage, Heritage figures. The other 11.8 million went on Medicaid. (Heritage only has hard data through 2015, but enrollment in the exchanges was basically flat in 2016.)” (Investors’ Business Daily, 12.13.16)
- Did Obamacare Really Insure 20 Million? “The Department of Health and Human Services claims that 20 million people have gained health coverage since the enactment of Obamacare in 2010 through early 2016… A recent analysis by The Heritage Foundation’s Edmund Haislmaier and Drew Gonshorowski uses the more accurate method, taking actual enrollment data from Medicaid and private insurance companies to assess the impact Obamacare has had on coverage. The researchers found that just over 14 million people gained coverage from the end of 2013 to the end of 2015. Of those 14 million, 11.8 million gained their insurance through Medicaid and 2.2 million through private coverage.
- Private market growth has been slow: Enrollment in the individual market increased by 5.9 million and the self-insured employer market grew by 3.9 million. However, these increases were largely offset by an enrollment drop of 7.6 million people in fully insured employer group plans. Overall, the net gain in private market coverage was only 2.3 million people.
- Medicaid enrollment has surged: In states that adopted Obamacare’s Medicaid expansion, enrollment surged by 10.4 million. However, Medicaid enrollment also rose by 1.4 million in states that didn’t expand their Medicaid programs. Overall, enrollment in Medicaid and the Children’s Health Insurance Program accounts for 84 percent of the total coverage gains from Obamacare since 2014. (The Daily Signal, 12.9.16)
Impact of Repeal on Public Health
- Will Repealing Obamacare Kill People? “A statistical claim that the ACA saves large numbers of lives should be supported by evidence that it has reduced mortality rates; yet the opposite occurred… The best statistical estimate for the number of lives saved each year by the Affordable Care Act (ACA) is zero. Certainly, there are individuals who have benefited from various of its provisions. But attempts to claim broader effects on public health or thousands of lives saved rely upon extrapolation from past studies that focus on the value of private health insurance. The ACA, however, has expanded coverage through Medicaid, a public program that, according to several studies, has failed to improve health outcomes for recipients. In fact, public health trends since the implementation of the ACA have worsened, with 80,000 more deaths in 2015 than had mortality continued declining during 2014–15 at the rate achieved during 2000–2013.” Cass, Owen. (Manhattan Institute, February, 2017)
Public Preference on ACA Replacement
American Action Network (2.6.17). “At American Action Network (AAN), we commissioned a survey last month to find out what Americans think about improving our broken healthcare system.
- Nearly seven in 10 Americans support repealing ObamaCare with a realistic, modest transition period during which people can keep current coverage. Even a plurality of Democrats agreed with this proposal, by a 48 to 43 margin.
- Specifically, nearly nine in 10 Americans support a price transparency requirement for doctors and hospitals, as well as allowing small businesses to pool together to negotiate lower health insurance prices.
- More than eight in 10 Americans support allowing health insurance companies to sell plans across state lines for more choice and lower costs.
- Americans want an ObamaCare replacement plan that provides health policy ownership and portability. Nearly eight in 10 Americans favor a health plan that can be taken from job to job and into retirement years.
- Americans want patient-centered healthcare. Nearly 75 percent of respondents support a plan that empowers patients and doctors to choose the plans and medical treatments that are right for them.” Bliss, Corry. (The Hill, 2.6.17)
ACA Replacement Proposals
The American Health Care Act (AHCA)
In early March 2017, House leadership introduced the American Health Care Act, which, although not a repeal proposal, significantly alters the ACA.
CBO Cost Estimate (3.13.17)
- Effects on the Federal Budget. “CBO and JCT estimate that enacting the legislation would reduce federal deficits by $337 billion over the 2017-2026 period. That total consists of $323 billion in on-budget savings and $13 billion in off-budget savings. Outlays would be reduced by $1.2 trillion over the period, and revenues would be reduced by $0.9 trillion. The largest savings would come from reductions in outlays for Medicaid and from the elimination of the Affordable Care Act’s (ACA’s) subsidies for nongroup health insurance. The largest costs would come from repealing many of the changes the ACA made to the Internal Revenue Code—including an increase in the Hospital Insurance payroll tax rate
- Effects on Health Insurance Coverage. “CBO and JCT estimate that, in 2018, 14 million more people would be uninsured under the legislation than under current law… In 2026, an estimated 52 million people would be uninsured, compared with 28 million who would lack insurance that year under current law.
- Most of that increase would stem from repealing the penalties associated with the individual mandate. Some of those people would choose not to have insurance because they chose to be covered by insurance under current law only to avoid paying the penalties, and some people would forgo insurance in response to higher premiums.
- Later, following additional changes to subsidies for insurance purchased in the nongroup market and to the Medicaid program, the increase in the number of uninsured people relative to the number under current law would rise to 21 million in 2020 and then to 24 million in 2026. The reductions in insurance coverage between 2018 and 2026 would stem in large part from changes in Medicaid enrollment.”
Prior Major Proposals
Full ACA Repeal Plans
There have been many proposals calling for full repeal of the ACA and replacement with a more market-oriented alternative. These are listed in order of public release:
- When Obamacare Fails (1/12). Proposed by Tom Miller, American Enterprise Institute.
- Universal Health Savings Accounts (10/12). Proposed by Peter Ferrara and John Goodman.
- Constructing an Alternative to Obamacare: Key Details for a Practical Replacement Program (12/12). Proposed by James C. Capretta, American Enterprise Institute.
- Empowering Patients First Act (6/13). Introduced by Rep. Price.
- Patient OPTION Act (8/13). H.R. 2900 introduced by Rep. Paul Broun, M.D.
- Best of Both Worlds: Uniting Universal Coverage and Personal Choice in Health Care (8/13). Proposed by 8 health economists and released by the American Enterprise Institute.
- American Health Care Reform Act (9/13). Proposed by the Republican Congressional Study Committee.
- A Winning Alternative to Obamacare (1/14). Proposed by Jeffrey Anderson, 2017 Project.
- Anti-Obamacare Recovery Plan (3/14) released by then-Senate-candidate Benjamin Sasse (R-Nebraska).
- America Next (4/14). Proposed by Gov. Bobby Jindal (who dropped out of the presidential race on 11.17.15).
- Patient Freedom Act of 2015 (6/15). Proposed by Senator Bill Cassidy (R-LA). Analysis by David Holberg.
- Day One Patient Freedom Plan (8/15). Proposed by Gov. Scott Walker (who dropped out of the 2016 presidential race on 9.21.15).
- The Conservative Plan for 21st Century Health (10/15). Proposed by former Gov. Jeb Bush.
- Improving Health and Health Care: An Agenda for Reform (12/15). Proposed by a group of scholars at the American Enterprise Institute (AEI).
- World’s Greatest Healthcare Plan Act of 2016 (5/16). Introduced by Representative Pete Sessions (R-TX) and Senator Bill Cassidy (R-LA). Offered by policy analyst John Goodman (6.16.16) is a summary of the major provisions of H.R. 5284, with links to short white papers explaining each element. The bill is designed to correct 25 problems in the ACA.
- Patient Freedom Act of 2017 (1/17). Introduced by Senators Bill Cassidy, MD (R-LA), Susan Collins (R-ME), Shelley Moore Capito (R-WV) and Johnny Isakson (R-GA). Fact Sheet.
- Keep or Replace Obamacare? It Might Be Up to the States. New York Times Graphic. (1.24.17)
- The Obamacare Replacement Act (S. 222) (1/17). Introduced by Sen. Rand Paul, M.D. (R-KY). [Text]
Partial ACA Repeal Plans
These proposals would repeal most major components of the ACA:
- Patient Care Act (2/15). Introduced 2.5.15 by Senators Burr and Hatch, Rep. Upton. Would repeal all of the ACA “except for the changes to Medicare.” Center for Health and Economy analysis (2.27.15).
- Health Care Choice Act (1/15).
- Rep. Marsha Blackburn (R-TN) first introduced H.R. 543 on 1.27.15; original cosponsors of H.R. 543 include: Rep. Diane Black (TN-06); Rep. Charles Boustany (LA-03); Rep. Scott DesJarlais(TN-04); Rep. Chuck Fleischmann (TN-03); Rep. Chris Gibson (NY-19); Rep. Brett Guthrie (KY-02); Rep. Gregg Harper (MS-03); Rep. Adam Kinzinger (IL-16); Rep. Leonard Lance (NJ-07); Rep. Billy Long (MO-07); Rep. Mia Love (UT-04); Rep. Tom McClintock (CA-04); Rep. Pete Olson (TX-22); and Rep. Phil Roe (TN-01). The bill would repeal only Title I of the ACA (reform and expansion of private health insurance) and allow for purchase of coverage across state lines.
- The identical bill, S. 647, was introduced 3.3.15 by Senator Cruz. The bill is cosponsored by Sens. John Barrasso (R-WY), Mike Crapo (R-ID), Marco Rubio (R-FL), and David Vitter (R-LA). Full text.
- The Hill reports (3.3.15) “while Cruz’s bill does not fully repeal ObamaCare, he maintains that is the ultimate goal.” “Every last word of Obamacare must be repealed,” Cruz said in the statement. “And while we continue that fight, we must also send bill after bill to the president’s desk to stop its harmful effects.
Plans to Significantly Amend ACA
One proposal would retain some of the ACA’s structural features (e.g., Exchanges, premium subsidies in the form of tax credits), but significantly amend the details. Transcending Obamacare (8/14), proposed by Avik Roy, Manhattan Institute, would reform Medicare and Medicaid, eventually allowing such beneficiaries to migrate to the ACA Exchanges.
Plans to Significantly Expand Use of Health Savings Accounts
- Health Savings Account Expansion Act. Sen. Jeff Flake (R-AZ), Rep. Dave Brat (R-VA), and other members of Congress introduced legislation based on the “Large HSAs” concept Michael F. Cannon first proposed here and developed here, here, here, here, and here. Large HSAs could be created with or without repealing ObamaCare. Americans for Tax Reform and FreedomWorks have endorsed the bills. Review by Cannon (6.2.16) can be found here.
The “Health Savings Account Expansion Act” (H.R. 5324, S. 2980) would expand the availability and benefits of tax-free health savings accounts (HSAs) in several ways.
- It would nearly triple existing HSA contribution limits from $3,400 for individuals and $6,750 for families to $9,000 and $18,000.
- It would allow tax-free HSA funds to purchase health insurance, over-the-counter medications, and direct primary care.
- It would eliminate the mandate that HSA holders purchase a government-designed high-deductible health plan.
- It would repeal ObamaCare’s increase of the penalty on non-medical withdrawals.
- The Obamacare Replacement Act (S. 222) (1/17). Introduced by Sen. Rand Paul, M.D. (R-KY). [Text]
Also see Voluntary Health Reform.
Components of ACA Affected
- Kliff, Sarah. (11.17.16). I Read 7 Republican Obamacare Replacement Plans. Here’s What I Learned.
- McDonough and Fletcher have provided ((.8.15) a detailed analysis of 8 Republican/conservative replacement plans, detailing how each deals with major components of the ACA. In terms of which provisions would be affected, the analysis shows the following provisions would be repealed:
- Title I Reform and expansion of private insurance
- Mandated coverage
- Individual mandate (at least 7 plans)
- Employer mandate (at least 7 plans)
- Required coverage of young adults up to age 26 on parent’s policy (at least 7 plans)
- Required coverage for patients participating in clinical trials (at least 7 plans)
- Restrictions on pricing/profitability
- Modified community rating–limits on age/gender/health in setting premiums (at least 7 plans)
- Minimum medical loss ratios (at least 7 plans)
- Review of premium increases greater than 10% (at least 7 plans)
- Minimum health benefits
- Required coverage of preventive services without cost sharing (at least 7 plans)
- 10 “essential” health benefits required in most policies (at least 7 plans)
- Limits on cost sharing including deductibles and coinsurance (at least 7 plans)
- Elimination of annual coverage limits (at least 7 plans)
- Ban on lifetime coverage limits (at least 6 plans)
- Establishment of federal and state health insurance Exchanges (at least 7 plans)
- Title II Medicaid expansion to 138% poverty (7 plans)
- Title III Medicare and delivery system reforms (5 plans)
- Title IV Prevention of chronic disease and improvement of public health (6 plans)
- Title V Health care workforce (6 plans)
- Title VI Transparency and program integrity (6 plans)
- Title VII Improving access to innovative medical therapies (6 plans)
- Title IX Revenue provisions (6 plans)
Congressional Initiatives to Repeal the ACA
Following Senate passage on 12.3.15 of a reconciliation bill that repealed major components of the ACA, Timothy Jost reported (12.4.15), “the House has voted over fifty times to repeal the ACA since the Republicans took control in 2011, but this is the first time the Senate has passed an ACA repeal bill.”
Congressional Research Service
- Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act. December 9, 2015 – R43289. This updated report summarizes legislative and other actions taken to repeal, defund, delay, or otherwise amend the ACA since the law’s enactment. The report includes 3 detailed tables:
- Table 1. Enacted Legislation That Modified, or Extended or Rescinded Funding for, Programs Established by the ACA
- Table 2. ACA Provisions in Bills Approved by the House in the 112th, 113th, and 114th Congresses
- Table 3. ACA Repeal Provisions in the House Reconciliation Bill (H.R. 3762) passed 10.23.15 and the Senate version passed 12.3.15.
- Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act. November 4, 2015 – R43289. This report includes the same 3 detailed tables as are included in the 12.9.15 report except that it does not codify.
- Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act. February 3, 2015-R43289. Available at Amazon.com.
- Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act. March 28, 2014-R43289. The information is presented in four appendices.
- Table A-1 in Appendix A summarizes the authorizing legislation to amend the ACA that has been approved by both chambers and enacted into law.
- Table B-1 in Appendix B summarizes the ACA provisions in authorizing legislation that passed the House in the 112th Congress (2011-2012) but was not approved by the Senate. It also lists the ACA-related legislation that the House has passed to date in the 113th Congress (2013-2014), but which has not been taken up by the Senate.
- Table C-1 in Appendix C summarizes the ACA-related provisions in enacted annual appropriations acts for each of FY2011through FY2014. Also included is a brief overview of all the ACA-related provisions added to appropriations bills considered, and in most cases reported, by the House and Senate Appropriations Committees since FY2011.
- Finally, Table D-1 in Appendix D summarizes various administrative decisions taken by HHS and the Department of the Treasury to delay implementation of specific ACA requirements by one year.
- Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act. November 22, 2013 – R43289. Congress is deeply divided over implementation of the Patient Protection and Affordable Care Act (ACA), the health reform law enacted in March 2010. Since the ACA’s enactment, lawmakers opposed to specific provisions in the ACA, or to the entire law, have debated implementation of the law on numerous occasions and considered multiple bills to repeal, defund, delay, or otherwise amend the law. Most of the legislative activity on these ACA-related bills has taken place in the House. The legislation has included stand-alone bills as well a provisions in broader, often unrelated measures that would (1) repeal the ACA in its entirety and, in some cases, replace it with new law; (2) repeal, or by amendment restrict or otherwise limit, specific provisions in the ACA; (3) eliminate appropriations provided by the ACA and rescind all unobligated funds; (4) replace the mandatory appropriations for one or more ACA programs with authorizations of (discretionary) appropriations, and rescind all unobligated funds; and (5) block or otherwise delay implementation of specific ACA provisions. A few bills containing provisions to amend the ACA that have attracted sufficiently broad and bipartisan support have been approved in both the House and the Senate and signed into law.
- Volsky, Igor. Blow By Blow: A Comprehensive Timeline Of The GOP’s 4-Year Battle To Kill Obamacare. ThinkProgress. 3.23.14. An extremely detailed account of various initiatives to repeal or defund the ACA, over the 4 years beginning March 23, 2010.
Full Repeal Initiatives
According to Washington Post’s Glenn Kessler at The Fact Checker, as of mid-July 2013, there had been only six House votes to repeal the entire ACA:
- January 19, 2011 — House repealed the health care law in its entirety. (H.R. 2) (Measure passed 245 to 184, according to The Washington Post Congressional Votes Database.)
- July 11, 2012 — House repealed Obamacare in its entirety in the wake of the Supreme Court decision to uphold the vast majority of the law. (H.R. 6079.) (See the vote count.)
- May 16, 2013 — House repealed Obamacare in its entirety as a stand alone bill. (H.R. 45) (See the vote count.)
According to Mr. Kessler: “There were also three votes on House budget resolutions that included repeal of the law, though these were only nonbinding budget blueprints. One could quibble about whether or not these should be counted in a tally of votes concerning full repeal of the law.” Here are those votes:
- April 15, 2011 — House passed FY2012 budget which repeals and defunds Obamacare. (H.Con.Res.34) (See the vote count.)
- March 29, 2012 — House passed FY2013 budget which repeals and defunds Obamacare. (H.Con.Res.112) (See the vote count.)
- March 21, 2013 — House passed FY2014 budget which repeals and defunds Obamacare. (H.Con.Res.25) (See the vote count.)
More Recent Repeal Initiatives
On 10.23.15, the House passed H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015. Passage of the bill would cut out key elements of Obamcare, including the individual and employer mandates, the “Cadillac” tax on expensive health plans, the medical device tax, the Independent Payment Advisory Board (IPAB), funding for the Prevention and Public Health Fund (PPHF) and the requirement that certain large employers automatically enroll new employees in health insurance plans and continue the enrollment of current employees in a health insurance plan. The Senate version passed 12.3.15 with additional items added to the repeal list.
AP reported that Republicans “intend to schedule a veto override vote for Jan. 22, when anti-abortion activists hold their annual march in Washington to mark the anniversary of the Supreme Court decision in 1973 that legalized abortion.”
- Total Impact. CBO. H.R. 3762, Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015 (10.20.15). CBO and the staff of the Joint Committee on Taxation (JCT) estimate that enacting H.R. 3762 would decrease deficits by about $130 billion over the 2016-2025 period ($79 billion exclusive of macroeconomic feedbacks). For the version of the bill passed by the Senate on 12.3.15, excluding macroeconomic effects, CBO and JCT estimate that, on net, enacting the
legislation would reduce federal deficits by $281.6 billion over the 2016–2025 period; that
change would result from a $1.4 trillion reduction in outlays partially offset by a
$1.1 trillion decrease in revenues.
- Impact by Major Provision. CRS. Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act. December 9, 2015. Table 3. ACA Repeal Provisions in the House Reconciliation Bill (H.R. 3762) Comparison of the House and Senate Bills contains a list of the major provisions to be repealed.
- Household Impact. Those cut-backs in government programs [including Planned Parenthood funding, but mostly ACA-related funds] “save” a little over $3,200 per U.S. family and reduce the national debt by just over $1,000 per U.S. family. (We say the bill “saves” because it reduces taxes, which are a cost to taxpayers, and it reduces spending, which we also treat as a “cost” to taxpayers. There is a greater reduction in spending than the reduction in revenues, so the result is a lower national debt.) (WashingtonWatch.com, 10.25.15).
Senate Republicans are divided on how to proceed. According to The Hill (11.12.15), “a few Republican senators think the repeal bill should be narrowed down to reforms that Democrats support so it has a chance of becoming law, but they are a minority within the Senate GOP conference.”
- Byrd Rule Violations. The Senate parliamentarian ruled 11.10.15 that the individual mandate and employer mandate fail the Byrd rule for inclusion in a reconciliation bill, making such provisions subject to a point of order.
- “One Senate Republican aide said work was continuing at the leadership level with the parliamentarian’s office to find a mechanism to include the mandate repeals. But the office of Senate Minority Leader Harry Reid, D-Nev., on Thursday dismissed the idea that the GOP could develop a fix so the repeal of the mandates are not subject to a 60-vote threshold” (Roll Call, 11.12.15).
- According to The Hill (11.12.15), “Senate Republican leadership aides, however, say the language repealing the mandates can be easily fixed with amendments on the floor. “There was always going to need to be a Senate substitute amendment to take the House policies and accomplish them in a way that is consistent with the Byrd Rule (which only applies to the Senate),” said a Senate GOP leadership aide.”
- Senate Holdouts for Full Repeal. Senators Marco Rubio, Ted Cruz and Mike Lee all have taken the position in a statement made 10.22.15 that they “cannot support” a bill that doesn’t “fully repeal” the health care law.
- Opponents of Medicaid Expansion Repeal. According to The Hill (11.12.15), “Repealing the Medicaid expansion is a dicey proposition for endangered Senate incumbents running in four states: Illinois, Ohio, New Hampshire and Pennsylvania, all of which broadened Medicaid.” The Hill quoted 3 Republican Senators from Montana, North Dakota, West Virginia who expressed concerns over Medicaid expansion repeal, along with an additional Senate Republican who wished to remain anonymous.
- Opponents of Planned Parenthood Cuts. Even if the mandates are included, it is unclear whether Republicans can get 51 votes to pass the House version of reconciliation given that it also includes a provision to defund Planned Parenthood–something moderate senators such as Senator Mark Kirk (R-IL) opposes (Roll Call, 11.12.15).
State Efforts to Repeal Obamacare
- American Legislative Exchange Council. The council has circulated a 32-page guide for state legislators called State Legislators Guide to Repealing Obamacare, as well as launching numerous model bills targeted at various aspects of the legislation.
Components of ACA Repealed
Five provisions of the ACA were formally repealed through statutes signed into law by the president.
1099 Reporting Requirement (4.14.11)
Designed to raise $17 billion in the first 10 years, the requirement that businesses fill out an IRS form for any purchases over a year exceeding $600 was repealed in H.R. 4, Comprehensive 1099 Taxpayer Protection and Repayment of Exchange Subsidy Overpayments Act signed by President Obama on April 14, 2011. This provision was repealed because “It was extremely onerous (and) raised very little revenue,” according former CBO director Douglas Holtz-Eakin.
Free Choice Vouchers (4.15.11)
This provision, supported by Senator Ron Wyden (D., Ore.), would have allowed some 300,000 employees to “opt out” of their employer-sponsored plans and choose their own coverage using employer-financed vouchers. Due to concerns that it “could lead young, healthy workers to opt out” of their employer plans, “driving up costs for everybody else,” it was eliminated on April 15, 2011 as part of the comprehensive budget deal to avert a government shut-down.
CLASS Act (1.2.13)
The Community Living Assistance Services and Supports (CLASS) program, would have established a national, voluntary insurance program for purchasing community living services and supports designed to expand options for people who become functionally disabled and require long-term help. It was widely criticized as one of the gimmicks made to make the ACA look more affordable, since the government would have collected a large amount in premiums during its first 10 years while paying out relatively little. Even Sen. Kent Conrad (D-N.D.) called the CLASS Act “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.” In October 2011, the Secretary of Health and Human Services announced that the CLASS Act was fiscally unsustainable as written. It was finally repealed as part of the The American Taxpayer Relief Act of 2012, signed by the President on January 2, 2013.
Automatic Enrollment Requirement for Employees in Large Firms (11.2.15)
The Bipartisan Budget Act of 2015 (11.2.15)repealed an ACA provision which would have required employers with more than 200 full-time employees to automatically enroll their employees in health coverage, unless the employees opted out, and to keep them enrolled (Galen Institute).
Non-Deductibility of Cadillac Tax as Business Expense (12.18.15)
Statute. The Consolidated Appropriations Act, 2016 passed by Congress and signed into law on December 18, 2015 repeals a provision of the ACA that provided that the excise tax is not deductible as a business expense.
Impact. According to Timothy Jost, this should have the effect of significantly reducing the effect of the tax even if and when it goes into effect.
Components of ACA Proposed for Repeal
Congressional Research Service. Legislative Actions to Repeal, Defund, or Delay the Affordable Care Act. December 9, 2015. Table 2. ACA Provisions in Bills Approved by the House in the 112th, 113th, and 114th Congresses summarizes major ACA provisions in authorizing legislation that passed the House in 2011-2012 (112th Congress), 2013-2014 (113th Congress) and 2015 (114th Congress to date) but was not approved by the Senate.
Other Components Proposed for Repeal (Ranked by Budgetary Impact)
The items below are listed in approximate order of their expected impact on the federal budget deficit, starting with items expected to achieve the greatest deficit reduction.
Premium Tax Credits and Cost-Sharing Reductions
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 repeals the premium tax credits; cost-sharing reductions; and the HHS Secretary’s authority to determine individuals’ eligibility to participate in an exchange and receive the tax credits and cost-sharing reductions. Repeals the IRS’s authority to disclose taxpayer return information to HHS for eligibility determinations. All these provisions take effect after December 31, 2017 (no comparable provision in House version) (Table 3).
- Budget Impact. CBO’s score did not separately break out the dollar savings from repeal of the premium tax credits and cost-sharing reductions. However, CBO had earlier estimated 10-year savings (2016-2025) of $822 billion from repeal of Exchange subsidies (but this figure includes spending for exchange grants to states and net spending and revenues for risk adjustment and reinsurance: Table 2).
- Current Initiatives. The Budget Reconciliation passed by the House on 10.23.15 repeals the employer mandate and associated penalties, effective January 1, 2015; according to Timothy Jost, “because the Senate Parliamentarian decided that outright mandate repeals could not be included in a budget reconciliation bill under the Senate rules, the legislation did not eliminate the mandates but simply amended them to provide that there would be no penalty for noncompliance.” Accordingly, the Senate version passed 12.3.15 eliminates the penalties for failing to comply with the employer mandate, effective January 1, 2015 (Table 3). Further discussion here.
- Political Prospects.
- The Case for Repeal. In Why Not Just Eliminate the Employer Mandate? (5.14) Urban Institute researchers have made the case that the employer mandate will not lead to more people getting coverage because those firms that don’t provide it will likely opt for the penalty. They estimate that most employers wouldn’t drop coverage if the penalties were eliminated, in part, because of the tax benefits. All told, only 500,000 would lose employer coverage after the mandate is repealed–a decline of just 0.3%.
- Bipartisan Support. Paige Winfield and Kyle Cheney. Why liberals are abandoning the Obamacare employer mandate. Politico. 7.6.14. Authors document that many believe employer mandate creates as many problems as it solves, so there is a growing consensus to abandon it, but probably not until 2015 due to concerns about 2014 elections.
- Budget Impact.
- CBO’s score of the Senate version did not separately break out the dollar savings from repeal of the employer mandate.
- However, CBO did project (Table 3) that repeal of the individual and employer mandate together would reduce the deficit by $147.1 billion over 10 years (FY2016-2025).
- In an earlier report (June 2015), CBO had estimated that lost penalty payments from employers resulting from repeal of the ACA would increase the deficit by $167 billion over the same 10 years (inclusive of the associated effects on revenues of changes in taxable compensation); in contrast the parallel loss of penalty payments from the individual mandate was expected to be about $43 billion (Table 2). Thus, the pro rata share of the $147.1 billion attributable to employers would be ~$117 billion.
- Timothy Jost notes “curiously, the bill does not repeal the ACA’s reporting requirements that apply to large employers and insurers, which are subject to their own penalty. Thus employers would have to continue to report compliance with the mandate even though they faced no penalties for noncompliance.”
- Past Initiatives. In March 2014, the House voted 250-160 to delay the ACA’s individual mandate for a year. The bill from Rep. Lynn Jenkins (R-Kan.) picked up support from 27 Democrats.
- Current Initiatives. The Budget Reconciliation passed by the House on 10.23.15 repeals the individual mandate and associated penalties, effective January 1, 2015; according to Timothy Jost, “because the Senate Parliamentarian decided that outright mandate repeals could not be included in a budget reconciliation bill under the Senate rules, the legislation did not eliminate the mandates but simply amended them to provide that there would be no penalty for noncompliance.” Accordingly, the Senate version passed 12.3.15 eliminates the penalties for failing to comply with the individual mandate, effective January 1, 2015 (Table 3). Further discussion here.
- Budget Impact.
- CBO’s score did not separately break out the dollar savings from repeal of the individual mandate.
- However, CBO had earlier estimated that a one-year delay of the individual mandate would save about $9 billion over 10 years.
- CBO projects (Table 3) that repeal of the individual and employer mandate together would reduce the deficit by $147.1 billion over 10 years (FY2016-2025). The pro rata share due to the individual mandate is roughly $30 billion (see calculation in Employer Mandate).
- Current Initiatives. Sec. 207 of the Budget Reconciliation passed by the Senate on 12.3.15 repeals the optional Medicaid expansion on December 31, 2017. This section of the Senate-passed bill also repeals several other ACA Medicaid provisions (no comparable provision in House version) (Table 3).
- Budget Impact. CBO’s score did not separately break out the coverage-related dollar savings from repeal of the Medicaid expansion. However, CBO projects that repeal of non-coverage related Medicaid provisions would reduce outlays by $15.0 billion over 10 years (FY2016-2025).
Prevention and Public Health Fund (PPHF)
- Current Initiatives. Full repeal of funding for PPHS was included in the Budget Reconciliation passed by the House on 10.23.15 and the Senate on 12.3.15 (Table 3). Further discussion here.
- Budget Impact. CBO projects that repeal of PPHF funding would reduce outlays by $12.7 billion over 10 years (FY2016-2025).
Small Business Tax Credits
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 repeals the tax credit for small employers with no more than 25 FTEs. The repeal applies to taxable years ending after December 31, 2017 (no comparable provision in House version) (Table 3).
- Budget Impact. CBO’s score for the Senate bill did not separately break out the dollar savings from this provision. However, in an earlier report (June 2015), CBO had estimated that elimination of small business tax credits resulting from repeal of the ACA would reduce the deficit by $11 billion over the same 10 years (inclusive of the associated effects on revenues of changes in taxable compensation); in contrast the parallel loss of penalty payments from the individual mandate was expected to be about $43 billion (Table 2).
Premium Tax Credits Overpayments
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 repeals temporarily the limits on the amount of any premium tax credit overpayment that has to be repaid to the government (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce outlays by $6.1 billion and increase revenues by $2.6 billion over 10 years (FY2016-2025), for a net gain of $8.7 billion.
Auto-Enrollment for Certain Large Employers
- Current Initiatives. Full repeal of auto-enrollment was included in the Budget Reconciliation passed by the House on 11.2.15 (Table 3). Further discussion here.
- Budget Impact. CBO projects (Table 3) that repeal of auto-enrollment would reduce the deficit by $7.9 billion over 10 years (FY2016-2025).
Funding for U.S. Territories
- Background. The ACA appropriated $1 billion for U.S. territories that elect to establish an exchange. The funds are available through 2019 (Table 3).
- Current Initiatives. Sec. 207 of the Budget Reconciliation passed by the Senate on 12.3.15 prohibits the HHS Secretary from allocating ACA funds to Puerto Rico and the other U.S. territories, effective January 1, 2018 (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce outlays by $0.2 billion over 10 years (FY2016-2025).
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 prohibits the HHS Secretary from collecting risk reinsurance fees or making payments, effective January 1, 2016 (no comparable provision in House version) (Table 3).
- Budget Impact. CBO’s score did not separately break out the dollar savings but it would appear that the loss in revenues would be entirely offset by reductions in payments.
Increased Penalties On Nonqualified HSA Withdrawals (Health Savings Account Tax)
- Background. The ACA increased the penalties on nonqualified HSA withdrawals to 20% (from 10%) and for Archer MSA withdrawals to 20% (from 15%).
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 reduces the tax on withdrawals from HSAs and Archer MSAs that are not used to pay for qualified medical expenses from 20% to 10% and 15%, respectively (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce revenues by $0.1 billion over 10 years (FY2016-2025).
Limitation of Excessive Remuneration Paid By Certain Health Insurance Providers
- Background. The ACA added a provision in the tax code which prohibits health insurance providers from deducting as business expenses any remuneration paid to an officer, director, or employee in excess of $500,000.
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 terminates this provision (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce revenues by $0.6 billion over 10 years (FY2016-2025).
Excise Tax on Indoor Tanning Services
- Background. The ACA imposes a 10% excise tax on indoor tanning services.
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 repeals the ACA’s 10% excise tax on indoor tanning services, effective December 31, 2015 (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce revenues by $0.8 billion over 10 years (FY2016-2025).
Elimination of Tax Deduction for Medicare Part D Subsidy
- Background. The ACA amended the tax code requiring employers to reduce the allowable deduction for retiree prescription drug costs by the amount of any subsidy received.
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 reverses the ACA’s amendment to the tax code so that employers do not have to reduce their business-expense deductions for retiree prescription drug costs by the amount of any federal subsidies. This change is effective for taxable years beginning after December 31, 2015 (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce revenues by $1.8 billion over 10 years (FY2016-2025).
Codify Economic Substance Doctrine
- Background. The ACA codified the economic substance doctrine and increased penalties associated with transactions lacking economic substance.
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 terminates this provision (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce revenues by $5.8 billion over 10 years (FY2016-2025).
Tax on Over-the-Counter Medications (“Medicine Cabinet Tax”)
- Background. Under the ACA, a medicine or drug must be a prescribed drug or insulin to be considered a qualified medical expense for the following tax-advantaged health accounts: health flexible spending accounts (health FSAs), health reimbursement accounts (HRAs), Archer medical savings accounts (Archer MSAs), and health savings accounts (HSAs). Prior to the ACA, OTC medications were allowable expenses without a prescription.
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 modifies the definition of qualified medical expenses for tax-advantaged health accounts so that it includes over-the-counter (OTC) medications (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce revenues by $6.7 billion over 10 years (FY2016-2025).
Independent Payment Advisory Board
- Current Initiatives. Full repeal of IPAB was included in the Budget Reconciliation passed by the House on 11.2.15 (Table 3). Further discussion here.
- Political Prospects.
- The Case for Repeal.
- Cohen, Diane and Michael Cannon. The Independent Payment Advisory Board: PPACA’s Anti-Constitutional and Authoritarian Super-Legislature. Cato Institute: June 14, 2012.
- Cannon, Michael. Sebelius Resignation May Create More Problems For Democrats Than It Solves. Forbes.com, April 11, 2014.
- Dean, Howard. The Affordable Care Act’s Rate-Setting Won’t Work. Wall Street Journal, July 28, 2013
- Bipartisan Support. Senate and House measures to repeal IPAB have 32 and 192 co-sponsors, respectively, including 22 Democrats in the House. In early August, 2013, The Hill reported that “a wave of vulnerable Democrats over the past three months has signed on to bills repealing the board’s powers, including Sen. Mark Pryor (Ark.) and Reps. Ron Barber (Ariz.), Ann Kirkpatrick (Ariz.), Kyrsten Sinema (Ariz.) and Elizabeth Esty (Conn.).” Former Democratic National Committee Chairman Howard Dean has made the case for IPAB repeal, along with former representative Barney Frank (D., Mass.).
- The Case for Repeal.
- Budget Impact. CBO projects (Table 3) that repeal of the IPAB would increase the deficit by $7.1 billion over 10 years (FY2016-2025).
Medical Device Tax
- Background. The ACA imposes a 2.3% tax on the sale of medical devices. Medical devices that are regularly available at retail for individual use and not primarily intended for use by a medical
professional are exempt from the tax.
- Past Initiatives. On March 21, 2013, the Senate by a vote of 79-20 passed an amendment to end the tax as part of a non-binding budget resolution as part of a budget resolution. One tax expert derided this as “the U.S. Senate’s answer to an air kiss.” A House version of the bill, sponsored by U.S. Representative Erik Paulsen, a Minnesota Republican, has drawn 212 cosponsors. Near the end of 2015, Congress placed a two-year moratorium on the tax, suspending it between January 2016 and December 2017 (p. 117).
- Current Initiatives. Full repeal of medical device tax, beginning January 1, 2016, was included in the Budget Reconciliation passed by the House on 10.23.15 and the Senate on 12.3.15 (Table 3). Further discussion here.
- Political Prospects. In 2013, it was reported that the medical device industry was seeking to have the tax repealed as part of more comprehensive tax reform. Although there is bipartisan support for repeal bills, health policy expert John Graham argues that this carries little weight since there is no way of paying for repeal (CBO projects the medical device tax will raise $29 billion from 2013-2022).
- Budget Impact. CBO projected on 12.11.15 that full repeal provision would reduce revenues by $23.9 billion over 10 years (FY2016-2025). Now that the 2-year moratorium is in place from January 2016-December 2017, Tax Foundation estimates that over the budget window from 2016-2025, full repeal would reduce federal revenue by $21 billion, or roughly $2.6 billion for each of the eight years during which the tax is currently scheduled to be in effect, on a static basis. However, because the medical device tax falls on the labor and capital used to create medical devices, and the labor and capital income of those who purchase them, repealing it would grow the capital stock and increase the long-run size of the U.S. economy by 0.02 percent. This would reduce the revenue loss of this option to $15 billion over 10 years, on a dynamic basis (p. 117).
Drug Manufacturers/Importers Tax (Tax on Prescription Medications)
- Background. The ACA imposes an annual fee on branded drug sales, proceeds of which are dedicated to Medicare Part B Trust Fund.
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 repeals the ACA’s annual fee on manufacturers and importers of branded prescription drugs, effective January 1, 2016 (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce revenues by $29.6 billion over 10 years (FY2016-2025).
Limits On FSA Contributions (“Special Needs Kids Tax”)
- Background. The ACA imposed a $2,500 contribution limit on health flexible spending accounts (FSAs), which previously had no contribution limits.
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 repeals the $2,500 contribution limit on health FSAs, effective for taxable years beginning after December 31, 2015. (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce revenues by $32.0 billion over 10 years (FY2016-2025).
Medicaid DSH Payment Reductions
- Background. The ACA, as amended, directs the HHS Secretary to make aggregate reductions in Medicaid DSH allotments for FY2018 through FY2025.
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 repeals the ACA’s reductions in Medicaid disproportionate share hospital (DSH) payments (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would increase outlays by $37.5 billion over 10 years (FY2016-2025).
Raise “Haircut” for Medical Itemized Deduction from 7.5% to 10% of AGI (Chronic Care Tax)
- Background. Taxpayers who itemize their deductions may deduct qualifying medical expenses that exceed 10% of their adjusted gross income. The ACA had increased the threshold from 7.5% to 10%.
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 reduces the income threshold for deducting medical expenses from 10% to 7.5%, effective for taxable years beginning after December 31, 2015 (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce revenues by $40.0 billion over 10 years (FY2016-2025).
Medicare Surtax on Higher-Income Individuals
- Background. The ACA increases the Medicare payroll tax by 0.9 percentage points for households making at least $250,000 ($200,000 single).
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 repeals the ACA’s 0.9% Medicare surtax on higher-income individuals, effective for taxable years beginning after December 31, 2015 (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce revenues by $123.0 billion over 10 years (FY2016-2025).
Health Insurance Tax (HIT)
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 repeals the ACA’s annual fee on certain health insurance providers, effective January 1, 2016 (no comparable provision in House version) (Table 3).
- Political Prospects. According to AHIP (6.17.13), there is a bipartisan House majority (218 cosponsors) to repeal the tax on health insurers, but there likewise are no “pay-fors” in these bills, dimming their political prospects. It was reported in July 2013 that the health insurance industry was seeking to have the tax repealed as part of more comprehensive tax reform.
- Budget Impact. CBO projects that this provision would reduce revenues by $142.2 billion over 10 years (FY2016-2025). See here for other analyses that estimate the tax’s impact on households and industry.
Medicare Surtax on Investment Income
- Background. The ACA imposes a 3.8% tax on the net investment income of higher-income individuals for households making at least $250,000 ($200,000 single). Previously, the Medicare tax did not apply to net investment income.
- Current Initiatives. The Budget Reconciliation passed by the Senate on 12.3.15 repeals the ACA’s 3.8% tax on the net investment income of higher-income individuals, effective for taxable years beginning after December 31, 2015 (no comparable provision in House version) (Table 3).
- Budget Impact. CBO projects that this provision would reduce revenues by $222.8 billion over 10 years (FY2016-2025).
- Legislative Update. Association of American Physicians and Surgeons.
- White Paper on Repeal/Replacement of the Affordable Care Act (1.4.17). Association of American Physicians and Surgeons.