House Tax Panel Is Eyeing Obamacare Mandate Repeal

  • Committee consideration comes after JCT cites revenue hole
  • Trump suggested combining initiatives in a tweet this month

Rep. Roskam Says Tax Reform on Track for End of Year

House Republicans are edging closer to accepting President Donald Trump’s suggestion to combine their tax legislation with a repeal of the Affordable Care Act’s mandate that all individuals purchase health insurance, according to a person who’s helping to draft the tax bill.

It’s a risky strategy that would give tax writers on the House Ways and Means Committee an estimated $416 billion in sorely needed offsets for the deep rate cuts they want. But it risks alienating GOP senators, who voted down a measure that would have repealed the mandate last summer.

The revenue gain would result because millions of people would forgo health insurance -- saving the government money on subsidies for low-income insurance policy holders -- if the penalty for going uninsured is eliminated.

Consideration of the individual-mandate repeal began to gain traction late Tuesday as Republican members of the House Ways and Means Committee came under pressure from GOP colleagues to preserve popular tax credits and deductions, said the person, who asked not to be named because of the sensitivity of the matter.

The change could come this week during the Ways and Means markup of the tax legislation, the person said, because Republicans want to avoid a repeat of the fights over their earlier health care bill when substantive changes were made not in the committee of jurisdiction, but in the last step before a floor vote.

Revenue Hole

Discussion of the individual mandate comes as the committee confronts a new $74 billion revenue hole in its plan. On Monday, an amendment from Ways and Means Chairman Kevin Brady effectively gutted a proposed excise tax on U.S. companies’ payments to foreign affiliates, according to a preliminary estimate from Congress’s Joint Committee on Taxation.

Kevin Brady

Photographer: Andrew Harrer/Bloomberg

The change meant losing $147.5 billion in revenue over a 10-year period -- driving the bill’s 10-year revenue loss to $1.574 billion. The 2018 budget resolution that Congress adopted allows for no more than $1.5 trillion. Now the panel must find new offsets to stay in line with the budget and avoid the threat of a Democratic filibuster in the Senate that could kill the tax legislation.

Republicans are also seeking other changes, including the reinstatement of a tax credit for adoptions.

The mandate that individuals buy insurance, with some exceptions, has been vehemently decried by conservatives as government overreach, but it also underpins the Affordable Care Act exchanges by forcing enough young, healthy people onto the exchanges to offset the cost of care for the elderly and sick.

Insurance Markets

While many Republicans in both the House and the Senate would like to get rid of this penalty, doing so without a replacement risks accelerating the collapse of insurance markets that have already been buffeted by uncertainty as the GOP tried and failed to repeal President Barack Obama’s signature health care law.

Trump first introduced the idea Nov. 1 in a series of tweets before the Ways and Means committee published the legislative text of its tax bill.

“Wouldn’t it be great to Repeal the very unfair and unpopular Individual Mandate in ObamaCare and use those savings for further Tax Cuts for the Middle Class,” Trump said in two tweets. “The House and Senate should consider ASAP as the process of final approval moves along. Push Biggest Tax Cuts EVER”

Brady has thus far resisted introducing elements of health legislation into the tax debate to avoid muddying the messaging and inflaming passions both in favor and against Obamacare. But now the mathematical realities of accommodating member requests within the bill’s $1.5 trillion fiscal hole is forcing him to reconsider, the person said.

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