Skip to main content
Sister Publication Links
  • ESG: THE NEW IMPERATIVE
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • COVID-19
    • Providers
    • Insurance
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Digital Health
  • Insights
    • ACA 10 Years After
    • Best Practices
    • Special Reports
    • Innovations
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Supply Chain
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • MORE +
    • Contact Us
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Government
July 20, 2017 01:00 AM

Healthcare groups seek alternatives to kill ACA taxes if GOP repeal effort fails

Harris Meyer
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    With GOP efforts to gut the Affordable Care Act on the verge of derailing, healthcare industry groups seeking repeal of ACA taxes on their members are looking to hitch a ride on a new legislative train.

    Some advocates of erasing those industry taxes, such as the Advanced Medical Technology Association, still hope Senate Republicans succeed in replacing the ACA or simply repealing most of it.

    Both measures Senate Republicans will consider next week would wipe out or delay the ACA's taxes on medical devices, health insurance premiums and branded drugs. The Senate's replacement bill, the Better Care Reconciliation Act, would delay implementation of the so-called Cadillac tax on high-value employer plans until 2026.

    But healthcare lobbyists say if those bills fail, industry groups will try to attach the tax repeals to other legislative vehicles, such as the bipartisan Food and Drug Administration user fee legislation, reauthorization of funding for the Children's Health Insurance Program, the 2018 omnibus budget bill, the Medicare extenders package or broader tax reform legislation.

    Each of those paths has its own political and procedural challenges, however. Bills that must go through congressional committees with jurisdiction over taxes are seen as a potentially more viable route under congressional rules.

    “We'll let it play out for the next couple of days and see what the Senate does,” said Scott Whitaker, CEO of AdvaMed, whose group has fought for years to eliminate the 2.3% excise tax on device sales. That levy takes effect again in 2018 after a two-year delay. “But we'll pivot to any moving vehicle. We're not going to give up.”

    Bipartisan legislation to stabilize the individual health insurance market is seen as a dark horse option, given the deep divide between Republicans and Democrats over the future of healthcare. Senate Majority Leader Mitch McConnell recently said he would negotiate market repairs with the Democrats if his ACA repeal bill died, and senior Democrats have expressed their willingness to work with him if ACA repeal is dropped.

    As part of a market stabilization bill, Democrats might well be willing to trade elimination of some ACA taxes for funding of cost-sharing reduction payments to insurers and new reinsurance mechanisms, political observers say.

    But lobbyists acknowledge that adding costly healthcare measures to any of those other bills could create political complications for those measures. “The industry taxes are a little more difficult to repeal outside of healthcare reform,” said Dean Rosen, a veteran Republican healthcare lobbyist.

    “It's well within reason that one or more of these taxes could be included in a bipartisan tax reform bill a year from now, but it's a steep road,” said Billy Wynne, a Democratic lobbyist who represents healthcare industry groups. The current repeal-and-replace effort “was definitely their best chance to get this done.”

    Still, there is durable bipartisan support for eliminating at least some of the ACA's healthcare industry taxes, which provide revenue for the law's coverage expansions and Medicare benefit enhancements. Democrats have backed repealing the taxes on medical devices, health insurance premiums and high-value employer health plans, which they say increase costs for consumers. The device and Cadillac plan taxes were delayed as part of a bipartisan budget deal at the end of 2015.

    AdvaMed argues that the medical-device tax has contributed to the loss of 29,000 device industry jobs nationally since 2013, and has slowed the pace of product innovation. Some are skeptical of that claim, with a 2014 Congressional Research Service study concluding the financial impact of the tax on device firms would be negligible.

    Whitaker said since the tax's suspension last year, device companies have used the tax savings to hire staff and restart innovations and projects that were paused due to the tax. “Clearly the tax had a major jobs impact in our industry, and we hope Congress recognizes the urgency of this before getting into the broader tax reform debate,” he said.

    America's Health Insurance Plans sent a letter to Senate Finance Committee Chairman Orrin Hatch (R-Utah) this week urging Congress to repeal the health insurance premium tax and the Cadillac plan tax as part of broader tax reform. AHIP said the premium tax has raised the cost of health insurance by more than $100 billion. That tax, delayed for two years, is set to resume Jan. 1.

    Repealing those industry taxes would be costly, though, and some lawmakers likely would demand that those revenue losses be offset through spending cuts or new revenue measures. That could block any tax relief.

    The Congressional Budget Office projects that repealing the annual fee on health insurance premiums would reduce federal revenue by $144.7 billion over 10 years, delaying the Cadillac tax on employer plans would cost $66 billion, and wiping out the medical-device tax would cost $19.6 billion.

    There is less political support for eliminating the annual fee on sales by manufacturers and importers of branded drugs, which the CBO estimated would reduce federal revenue by $28.5 billion over 10 years. Both President Donald Trump and congressional Democrats have been sharply critical of the pharmaceutical industry's price increases and may feel drugmakers are less deserving of a tax break.

    Rosen said killing the medical-device tax has the most political support, followed by repeal of the Cadillac plan tax and the health insurance premium tax. But he said even if Republicans and Democrats could come together to negotiate an insurance market repair package—which he's betting against—their priority will be funding cost-sharing reductions, reinsurance programs and stabilization grants to states.

    “I'm not sure how you pay for that and to layer on tax cuts makes it more difficult,” Rosen said.

    There also are doubts about the likelihood of including repeal of healthcare industry taxes in the GOP's planned tax reform package. Congressional Republicans face big hurdles in crafting and passing a sweeping tax bill because they are internally divided over spending and tax cut priorities. And tax reform isn't likely to pass until sometime next year—too late to block the medical-device tax from returning on Jan. 1.

    Even if House and Senate Republicans do reach agreement on a budget resolution setting the framework for a GOP-only tax deal, lobbyists question whether they will make a place for eliminating the ACA taxes.

    Cutting those healthcare taxes would leave less budgetary room for other tax changes Republicans may value more, such as reducing corporate income tax rates, said Sheila Burke, a strategic adviser at Baker Donelson and chief of staff to former Senate Majority Leader Bob Dole.

    “If the Republican healthcare bill fails, they won't want to go back to healthcare tax policy in the context of an already difficult-to-pass tax bill,” predicted Chris Jennings, a healthcare policy consultant who advised the Obama White House.

    Still, Burke, a senior adviser at the Bipartisan Policy Center, believes it's possible if the repeal effort dies that Republicans and Democrats can come together on an insurance market stabilization package—with or without healthcare industry tax relief. But it would have to happen quickly to have an impact on the 2018 market.

    “The odds aren't terribly good today, but the pressure from governors and insurance commissioners will be quite extraordinary,” she said.

    An edited version of this story can also be found in Modern Healthcare's July 24 print edition.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    Record 16.3M people enroll in ACA plans
    Record 16.3M people enroll in ACA plans
    367749098.jpg
    US health officials propose annual COVID-19 vaccination for most Americans
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Modern Healthcare Alert: Sign up for this breaking news email to be kept in the loop as urgent healthcare business news unfolds.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • COVID-19
      • Providers
      • Insurance
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Digital Health
    • Insights
      • ACA 10 Years After
      • Best Practices
      • Special Reports
      • Innovations
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Supply Chain
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • MORE +
      • Contact Us
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing