from National Family Voices:
Tax Bill - Repeal of ACA's Individual Mandate
On November 16, the House passed the Tax Cuts and Jobs Act (H.R. 1, summary) by a mostly partisan vote of 227-205. All Democrats opposed the bill, as did 13 Republicans. Most of the latter are from high-tax states that would be significantly disadvantaged by the bill's repeal of the deduction for non-business state and local income and sales taxes (SALT). (For more details, see the November 8 Update.)
Among other provisions that could be detrimental to children and families, the Housebill would repeal the medical-expense deduction, which helps families who have very high medical bills, and repeal the "orphan-drug" tax credit, which encourages the development of drugs to help people with rare conditions.
The Senate version of the tax bill was approved by the Senate Finance Committee last week along partisan lines. That bill would not repeal the medical-expense deduction but would repeal a central element of the Affordable Care Act (ACA) - the "individual mandate," which is the requirement that people have insurance or pay a penalty. (Read more below.)
Both bills would double the "standard deduction" that taxpayers can take, although that gain may be offset for some families by other changes. Both bills would increase the child tax credit temporarily (until 2023 and 2026) but do so in a way that gives a greater increase to higher-income families.
Impact of Repealing the Individual Mandate. Without a mandate to have insurance, many younger, healthy people will choose to go without it. Those who want to buy insurance will be relatively less healthy as a group, causing insurance premiums to rise. The Congressional Budget Office (CBO) estimates that repealing the individual mandate will result in premium increases of 10 percent in each of the next ten years, four million fewer people with insurance by 2019, and 13 million fewer people with insurance by 2027. Because some people learn that they are eligible for Medicaid when they seek insurance, repealing the individual mandate will also lead to a decrease of about 5 million people covered by Medicaid.
Deficit Increase. Tax cuts mean less revenue will be brought into the treasury, which is a cost compared to current law that must be "offset" (paid for) under budget rules. Both the House and Senate bills would offset some of the costs by saving the government money in other ways, such as eliminating certain tax deductions. In addition, the Senate bill's repeal of the individual mandate will reduce government expenditures for premium credits, cost-reduction subsidies, and Medicaid. The bills use these and other savings to partially pay for their tax cuts. Because the tax cuts would not be fully offset, however, budget rules will trigger automatic cuts in Medicare and some other mandatory programs (not including Medicaid or SSI) unless Congress waives that requirement when it passes the tax legislation. Such a waiver would require 60 votes, necessitating the cooperation of at least eight Democratic Senators. Democratic Senators may be willing to cooperate, though, in order to prevent significant Medicare cuts.
In any case, the tax legislation will result in a significant increase in the federal deficit. This poses a danger that Congress will want to reduce the deficit later by cutting Medicaid, SSI, Medicare, and other programs of importance to CYSHCN, people with disabilities, and families.
Many consumer, family, child, patient, provider, insurer and disability advocates are opposing both tax bills because, among other reasons, the House bill repeals the medical-expense deduction; the Senate bill repeals the individual insurance mandate; both bills generally favor corporations and individuals with greater wealth compared to middle- and low-income taxpayers; and because advocates are concerned that the large deficit increase caused by the tax cuts ultimately will prompt cuts in programs that are important to children, families, and people with costly disabilities or illnesses.
Outlook. The Senate is expected to vote on its bill during the week of November 27. Due to the narrow Republican majority in the Senate, the bill will fail if three or more Republicans oppose it. Senator Ron Johnson (R-WI) has already indicated his opposition(due to the manner in which small businesses are treated compared to large corporations); Senators Susan Collins (R-ME) has expressed reservations about the repeal of the individual mandate. Lisa Murkowski (R-AK) and John McCain (R-AZ) - who, along with Collins, killed earlier efforts to repeal the ACA - have not stated how they would vote, but Sen. Murkowski has expressed concerns about repeal of the individual mandate without enacting the Alexander-Murray bill to stabilize the insurance market. Senators Flake (R-AZ), Corker (R-TN), and Paul (R-KY) are considered uncertain. It is likely that last-minute changes will be made to try to get enough votes.
The president had been urging Congress to repeal the individual mandate in this tax legislation, but this week the administration said that it would be willing to accept the tax bill without the repeal if necessary to get it through Congress.
Assuming the Senate passes a bill, the House and Senate will have to work out a compromise between their respective versions. They plan to do so in time to have a bill on the president's desk by the end of the year.
CHIP Funding
CHIP funding expired on September 30. At this point, there is bipartisan and bicameral (House and Senate) agreement on CHIP policy, including a five-year extension. The "offsets" to pay for the cost of the legislation in the House-passed bill, including a major cut to the Prevention and Public Health Fund, are controversial, however. The Senate bill, which has not yet been passed, does not yet include any offsets. Most observers think the legislation will not be enacted until December, as part of a larger must-pass bill (to be determined). At that point, the time pressure will force compromise on offsets. (See the November 8 Washington Update.)
Meanwhile, states are running out of funds to run their CHIP programs. (See the November 2 Update.) On November 9, the Centers for Medicare and Medicaid Services (CMS) issued an Informational Bulletin to guide states in figuring out what to do if they must cease offering CHIP coverage. See CMS Guidance Increases Urgency for Congress to Extend CHIP Funding ("Say Ahhh!" Georgetown Center on Children and Families Blog, Nov. 13, 2017) and the recently published infographic, "State Checklist for Shutting Down CHIP Programs," from the National Academy on State Health Policy (NASHP)
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