Obamacare mandate undone in GOP tax accord, threatening law

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Republican lawmakers will overturn a key piece of the Affordable Care Act in their tax overhaul, a victory in a long GOP campaign against the health law.

Senate Majority Leader Mitch McConnell said the compromise tax bill from House and Senate negotiators will end the health law’s requirement that all individuals buy insurance or pay a fine. Doing so could jeopardize Obamacare’s already-shaky marketplaces, by reducing the number of healthier people who sign up for insurance.

The bill will “repeal Obamacare’s individual mandate tax, delivering relief to low- and middle-income Americans who have struggled under an unpopular and unworkable law,” the Kentucky Republican said in an emailed statement.

The new tax legislation must still be approved by both houses of Congress. Republicans hold a narrow 52-48 majority in the Senate, which will be further diminished when Alabama Democrat Doug Jones takes his seat.

The bill will also include a two-year tax break for individuals with high medical expenses, according to two senior congressional aides who described the provision on condition of anonymity. The provision lowers the amount people have to spend on health costs before they can deduct those costs, to 7.5 percent of their income, from 10 percent under current law.

The House had proposed eliminating the medical costs deduction, as a way of raising revenue for other tax cuts. Its expansion was pushed for by Senator Susan Collins, the Maine Republican whose vote is crucial to passing the tax package.

Undoing Obamacare’s mandate was one of a handful of specific changes McConnell mentioned in his statement. He also said the bill would lead to “further developing Alaska’s oil and gas potential,” a likely reference to opening the Arctic National Wildlife Refuge to drilling.

Opening the refuge to the energy industry is an attempt to ensure the compromise bill has enough votes to pass. Alaska Republican Senator Lisa Murkowski has previously opposed efforts to repeal the Affordable Care Act but she’s long pushed for Arctic drilling.

More Work Ahead

The status of other health provisions in the compromise bill remains unclear. The House’s tax measure ended a tax break for individuals with high medical expenses, while the Senate version made it more generous.

Congressman Kevin Brady, the Texas Republican who leads the House’s Ways and Means Committee, said lawmakers haven’t finished the package.

“We have more important work ahead of us to finalize this legislation,” he said in prepared remarks. “This is our once-in-a-generation opportunity to deliver historic tax reform that we—and the American people—can all be proud of.”

Health insurers and hospitals have opposed repealing the individual mandate, because doing so would likely increase the number of uninsured and destabilize insurance markets. For insurers, that could mean financial struggles or fewer customers. For hospitals, it could mean more people who get care without paying for it.

The Congressional Budget Office has estimated that 13 million people would be left without coverage by 2027 if the individual mandate is repealed. While the market for individual health plans would probably remain stable in most of the country, average premiums would rise roughly 10 percent, CBO said.

Separately, House Republicans have proposed delaying a number of other taxes tied to Obamacare. Those efforts won’t be included in the main tax bill, but could be added to year-end spending legislation.

Bloomberg News
Obamacare Tax reform Trump tax plan Mitch McConnell Kevin Brady CBO