Budget Bill Passes Senate, Repeals ACADecember 9, 2015
On Dec. 3, the Senate passed 52-47 legislation that would, among other things, repeal the two controversial excise taxes and eliminate the health insurance coverage mandates for individuals and employers enacted in the Patient Protection and Affordable Care Act of 2010 (PPACA). The bill—an amended version of the House-passed measure, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015 (H.R. 3762)–was passed using a fast-track budget reconciliation process.
Although the House has voted multiple times in recent years to repeal the PPACA in its entirety or in discrete parts, Senate passage of H.R. 3762 marks the first time a PPACA repeal measure has been able to clear both chambers. But that milestone is largely symbolic: assuming the House and Senate are able to reconcile the differences in their respective versions of the legislation, H.R. 3762 will head to the White House only to face a certain veto from President Barack Obama.
Both versions of H.R. 3762 would eliminate:
- The 2.3 percent excise tax imposed on the sale of certain medical devices, which became effective for sales of such devices after Dec. 31, 2012, and
- The 40 percent excise tax imposed on certain high cost employer-sponsored health coverage (known as the “Cadillac” tax), which is scheduled to take effect in 2018, as well as the current requirement that employers annually report the cost of each employee’s employer-sponsored health coverage on their Form W-2.
Although the Senate substitute to the House-passed version of H.R. 3762 originally called for delaying implementation of the Cadillac tax until 2025, lawmakers approved an amendment during floor debate that would repeal the tax outright. Finding offsets for both the medical device and Cadillac taxes, however, poses a steep challenge given estimates from the Joint Committee on Taxation (JCT) that repealing the Medical device and Cadillac taxes would reduce federal revenues by $23.9 billion and $91.1 billion, respectively, over the next 10 years.
The House version of the measure also would repeal the PPACA’s insurance coverage requirements under the individual and employer mandates. To avoid potential parliamentary concerns, Senate managers modified their bill to retain the two mandates but reduce the penalties for noncompliance to zero.
The Senate bill includes a provision not in the House version that would modify the rules related to recapture of excess advance payments of health insurance premium tax credits to eligible low-income individuals. It also includes certain nontax changes that were added to win support of certain Senate Republicans who were concerned that the measure did not go far enough in repealing the PPACA.
As expected, President Obama has promised to veto the Senate-approved bill, as well as having previously issued his veto intentions against the House-passed reconciliation bill, as well as other PPACA repeal measures approved in the House in recent years. Republicans do not seem to be in a position to muster the two-thirds majority in the House and Senate that would be required for a veto override.