GOP Drops Insurance Executive Tax Break in Health Bill, Aide Says

  • McConnell’s revised version retains Obamacare limits on pay
  • Republican leaders plan to release new text this week

GOP Drops Tax Cuts for Big Earners in New Health Bill

Senate Republicans have dropped plans to provide a tax break for health-insurance executives’ pay in a revised health-care bill that Senate Majority Leader Mitch McConnell has sent to the Congressional Budget Office, according to a Republican aide familiar with the plan.

An earlier version of the broad measure, designed to help the party keep its promise to replace Obamacare, scrapped a limitation for insurers on how much executive pay is tax deductible. The Affordable Care Act included a $500,000 deduction annual limitation for officers, employees, directors of health insurance providers.

The Obamacare tax increase would be retained in the new version, said the aide, who requested anonymity. The change removes a politically awkward provision, although the effect on revenue is relatively modest, with $505 million generated over 10 years, according to the Joint Committee on Taxation.

McConnell said that he plans to release the revised bill later this week and hold a key procedural vote early next week. But a number of Republican senators remain opposed to the measure. GOP leaders can only afford to lose two Republicans and still pass the measure, given Democrats’ united opposition.

The decision on the insurance executive tax break comes as Republicans in the chamber are seeking to free up more funds to bolster health expenditures and gain more support for an Obamacare replacement among GOP moderates. 

On Tuesday, Republican senators said the new version will drop two other tax cuts on high earners. Republican leaders are now planning to retain Obamacare’s 3.8 percent tax on net investment income for people who earn more than $200,000 and couples with incomes over $250,000, as well as a 0.9 percent Medicare surtax on the same incomes.

Those two tax increases generate nearly $231 billion in revenue over a decade, according to the JCT.

The U.S. House included the tax break for insurers in its version of the bill that passed in May.

Democrats have criticized the GOP proposal for benefiting the rich while causing poorer and sicker Americans to lose health coverage.

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