President Vetoes ACA Repeal

January 13, 2016

pic-whitehouseOn Jan. 8, President Barack Obama vetoed a budget reconciliation bill, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015 (H.R. 3762) that would have repealed major provisions of the Patient Protection Affordable Care Act (PPACA), stating at the time, that the bill would “reverse the significant progress” that has been “made in improving health care in America,” and noted that the PPACA has extended health coverage to about 17.6 million U.S. residents.

Despite the veto, the House is scheduled to hold a vote to override the veto on Jan. 26, but the chamber is unlikely to have enough votes to do so since H.R. 3762 did not pass by a veto-proof—two-thirds—majority in either chamber, and therefore, it is unlikely Republicans will be able to garner enough support. House Minority Leader Nancy Pelosi (D-Calif.) in a statement said, “House Democrats will sustain the president’s veto” of H.R. 3762.

The House voted 240-181 on Jan. 6 to approve the Senate-passed legislation that would repeal the bulk of the tax provision enacted in the PPACA, such as eliminating the 2.3 percent excise tax imposed on the sale of certain medical devices. The medical device excise tax became effective after Dec. 31, 2012; however, it was suspended for sales in 2016 and 2017 under the combined tax extenders and government appropriations package that Congress approved and the president signed into law in December 2015. H.R. 3762 would also eliminate the 40 percent excise tax imposed on certain high cost employer-sponsored health coverage (Cadillac tax) which was scheduled to take effect in 2018 but was delayed until 2020 under the new extenders-appropriations law.

The legislation would also retain the PPACA’s insurance coverage requirements under the individual and employer mandates; however, the penalties for noncompliance would be reduced to zero. On the expenditure side, the legislation would repeal the tax credit for small-business employee health coverage and the premium tax credit and cost-sharing subsidies for certain lower-income individuals. It also would modify the rules for recapturing excess advance payments of premium tax credits.

According to a revenue estimate released by the Congressional Budget Office (CBO), H.R. 3762, if enacted, would result in a net reduction in the federal deficit of $317.5 billion between 2016 and 2025 under traditional “static” scoring methods. Under “dynamic” scoring methods, which factor in macroeconomic effects, the legislation would reduce the deficit by an estimated $516 billion over the same period.