House Republicans have dropped a controversial tax on high-value employer health plans from the latest version of their bill to repeal and replace the Affordable Care Act.
A leaked draft of the bill dated March 6, obtained by Politico, eliminates a previous provision to tax employees for the value of employer-provided insurance that exceeds the 90th percentile of current premiums. That idea is broadly unpopular with business groups, labor unions, and conservatives.
Business groups have warned that taxing employer health plans would cause employers to drop coverage and prompt employees to drop out of company plans. “It would pretty quickly expose people to income and payroll taxes, and the number of people purchasing coverage would decline,” said Kristof Stremikis, associate policy director at the Pacific Business Group on Health.
House Republicans are expected to release their bill soon, but it's reportedly been delayed by objections from different wings of the GOP as well as an analysis from the Congressional Budget Office showing that it would significantly increase uninsured rates.
The latest draft still would repeal most of the ACA's taxes that financed the law's premium subsidies, Medicaid expansion and Medicare benefit enhancements. But it postpones the repeal of those taxes until 2018, a year later than previously proposed.
The only financing mechanism House Republicans had proposed was the new tax on high-value employer health plans, and now that's gone. They have not explained how they would finance the replacement tax credits in their legislation.
The latest version of the GOP premium tax credits would begin phasing them out at an income level of $75,000 for individuals and $150,000 for families, according to Politico. This was a concession to the most conservative Republicans, who objected to providing government subsidies to wealthier people.
But many Republicans remain worried about whether the nonpartisan CBO will score their bill as increasing the number of uninsured Americans. The age-based premium tax credits in the House bill generally would be smaller than what the ACA currently offers. Experts say they wouldn't be large enough to help lower- and middle-income individuals afford coverage.
“Republicans are stuck because there's no way to maintain the current level of coverage without subsidies that are similar in magnitude to the ACA's and without rules for insurance markets that are similar to the ACA's,” said Douglas Elmendorf, dean of the Harvard Kennedy School and former director of the Congressional Budget Office.
Story in Progress.