House tax panel may be mulling Obamacare mandate repeal

Gambit intended to reduce federal spending and offset tax rate cuts contained in proposed legislation.

(Bloomberg)—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 requires 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 savings on federal spending that are sorely needed to offset the deep tax rate cuts they want. But it risks alienating GOP senators, who voted down a measure that would have repealed the mandate this past summer.

The revenue gain would result because without the mandate to buy health insurance, millions of people would forgo health insurance, thus saving the government money on subsidies for low-income insurance policy holders.

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 healthcare bill when substantive changes were made not in the committee of jurisdiction, but in the last step before a floor vote.

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.

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

The mandate that individuals buy health 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.

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 healthcare law.

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

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.

Still, House Freedom Caucus Chairman Mark Meadows doubted that the repeal of the Obamacare mandate would be included in the House bill.

“There is a concern about having the healthcare debate and tax reform happen simultaneously,” Meadows said Tuesday. “House leadership hasn’t specifically said that but the indication, if I’m reading between the lines, is there’s no way it gets in the House version.”

Whatever the solution to bridge the gap is, it will likely be made behind closed doors. Despite the public debate this week, many of the most difficult decisions are being negotiated in secret between party leaders and individual members.

It remains unclear what changes, if any, will be made to the bill by its expected approval by committee on Thursday. But Brady has said that once it reaches the full House for a vote, the legislation won’t be open to amendment. And in two days, the Senate plans to release their version of a tax bill, which could be significantly different from the House version.

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