U.S. spending bill is believed to repeal health taxes

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Bloomberg—Congress is planning to use two spending bills that must pass this week to repeal Obamacare taxes, raise the tobacco purchasing age to 21 and extend the U.S. Export-Import Bank for seven years, according to a senior House Democratic aide familiar with the talks.

The negotiations are continuing, the aide said. The bills need to be finalized Monday for the House and Senate to have time to pass them before federal funding expires on Friday.

Obamacare taxes that would be repealed include a 2.3 percent excise tax on medical devices and a health insurance industry fee that would have taken effect next year, the aide said. The spending package would also repeal the “Cadillac tax,” a 40 percent excise tax on the most generous and expensive health insurance plans, which would have hit in 2022.

These taxes, which have been delayed previously, highlight the conflicting forces pulling at Democrats in Congress, who are keen to support the Affordable Care Act but also wary of raising taxes on heathcare costs.

The repeals would be attached to two packages of spending to provide the $1.4 trillion needed to avoid a shutdown of the U.S. government after December 20 and to operate federal agencies through next September.

The bills are the result of weeks of bipartisan talks between Democratic and Republican lawmakers and the White House. The House plans to vote Tuesday, with the Senate voting before the Friday deadline.

The White House has not explicitly supported the bills, although executive signoff on the bills is expected to avoid a repeat of the 35-day shutdown earlier this year. The government is currently running on a temporary stopgap spending bill because none of the 12 annual appropriations bills had been enacted by the October 1 start of Fiscal Year 2020.

The government spending deal would raise the age to purchase tobacco to 21. It does not include a compromise on surprise billing or prescription drugs. However, because some health-related funding will run out on May 22 under this deal, Democrats are hoping to use that deadline to revisit drug pricing as part of a broader healthcare compromise.

The plan also includes measures to reduce prices of generic pharmaceutical drugs, by making it easier for companies to compete to produce generic medicines.

Lawmakers are also negotiating other tax measures to include in the must-pass spending bills. Those could affect biodiesel, alcoholic beverages and short-line railroads.

Bloomberg News