GOP Senators Seek to “Gut” ACA Via State Waivers

Image result for state waivers imagesSource: Modern Healthcare

Conservative lawmakers are circulating a proposal that would make it easier for states to provide less coverage at higher costs for their residents.

Sens. Orrin Hatch (R-Utah) and Mike Crapo (R-Idaho) are mulling legislation that would overhaul the 1332 waiver process.

The draft legislation would make it easier for governors to apply for waivers without the state Legislature, shorten the time under which proposals must be reviewed, create templates that make it easier for waivers to be automatically approved and removes current budget barriers that make it easier to implement 1332 and 1115 waivers simultaneously.

“These changes will certainly make it easier and more attractive to apply for waivers,” said Yevgeniy Feyman, a Republican health policy analyst.

Policy insiders immediately slammed the legislation, saying it could weaken provisions put in place to ensure that experiments launched through waivers cover the same amount of people at comparable levels of coverage and costs.

The bill is drafted in a way that would permit waivers that reduce financial assistance to consumers or narrow the definition of essential health benefits. That could lead to fewer options for people with pre-existing conditions, according to Timothy Jost, a retired professor of healthcare law at Washington and Lee University and a supporter of the ACA.

It also allows states to move people off the federal marketplace into private exchanges that don’t have to abide to the same oversight standards as the federal marketplace.

“Basically, this would gut the ACA,” Jost said. “It gets rid of the guardrails.”

Others agreed, pointing to language in the bill that would empower the HHS secretary to approve waivers that would “assist in promoting the objective of affordability, market-based coverage for individuals seeking it, and consumer choice.”

“That is a very elastic standard that would likely do little or nothing to constrain waiver approvals in practice,” said Matthew Fiedler, an economist at the Brookings Institution’s Center for Health Policy.

Many believe the most notable part of the law was that consolidated waivers that would impact both the exchange population and Medicaid enrollees would only have to prove they wouldn’t add to the federal deficit collectively. As things stand now, states must prove deficit-neutrality within each program independently.

This change would make it easier for states to move people out of the Medicaid program and into private coverage, according to Stan Dorn, a senior fellow at Families USA.

However, unlike Arkansas, which is doing just that through a 1115 waiver, states making this change under the new legislation would not have to ensure the coverage was as comprehensive or as affordable for out-of-pocket costs as it would be under Medicaid.

More worrisome is that there is language in the bill that would make it difficult for future administrations to end a 1332 waiver if this new legislation is passed. The bill states that waivers may not be suspended or terminated, in whole or in part, by the HHS secretary before they expire unless they violate statutes outlined in the law.

But those standards are outlined in a vague way, Dorn said. “Future administrations would be hamstrung by this bill even if one were found to be hurting people by the scores,” he said.

To date, HHS approved a 1332 waiver from Hawaii that required employers to provide more generous coverage than is required under the ACA, and another from Alaska, which created a state reinsurance program to reduce premiums, effective in 2018. Oregon and Minnesota received similar approvals.

States like Massachusetts and Oklahoma would have benefited had the Hatch bill’s provisions related to quicker review times of 1332 waivers been in place when they first applied, according to Tara O’Neill Hayes, deputy director of Health Care Policy at American Action Forum, a right-of-center think tank. Both states either saw their waivers withdrawn or denied because they couldn’t be approved before 2018 open enrollment started Nov. 1.

Hayes is also pleased with the provisions that allowed governors to not have to wait on state legislatures to pass laws to seek the waivers. Some states have general assemblies that meet every other year on only for a few months. Such realities may be limiting how states can drive innovation in how care is delivered, Hayes said.

This is the latest in a string of Republican legislative attempts, following the failures of the Graham-Cassidy proposal, the Better Care Reconciliation Act and the American Health Care Act, which all sought to repeal the Affordable Care Act.

President Donald Trump has also used executive orders to weaken the law. Last month he signed an order allowing consumers to buy plans that would provide less coverage. Critics of the move argue it could weaken the risk pool if healthier people chose these plans versus those that comply with ACA requirements.

Earlier this year he signed another order allowing agencies to “waive, defer, grant exemptions from or delay parts of the law that put a financial burden on the states, individuals or healthcare providers.”

Initial Senate Tax Bill Does Not Repeal ObamaCare Mandate

Image result for senate tax bill imagesSource: The Hill

The tax-reform bill that Senate Republicans are releasing Thursday does not repeal ObamaCare’s individual insurance mandate, though the provision could be added down the line, GOP senators said.

Senators leaving a briefing about the legislation said repealing the mandate is not in the initial text of the legislation, but cautioned that the issue is still under discussion.

“There’s been a lot of discussion on that and we’re looking at it very seriously,” Sen. John Hoeven (R-N.D.) said, adding that the issue was discussed at Thursday’s meeting.

Hoeven said he personally supports repeal of the mandate.

An updated House tax-reform bill unveiled Thursday by House Ways and Means Committee Chairman Kevin Brady (R-Texas) also does not repeal the mandate.

Senate Republican leaders have been doing a whip count on repealing the ObamaCare penalty to see where support stands. Sen. John Cornyn(R-Texas), the No. 2 Senate Republican, said lawmakers are taking a “hard look” at the issue.

Proponents of nixing the mandate say it is a way to save money that could help pay for tax cuts. The Congressional Budget Office (CBO) says mandate repeal would save $338 billion over 10 years.

But moderates like Sens. Susan Collins (R-Maine) and Lisa Murkowski (R-Alaska) have expressed reluctance to repeal the mandate. Introducing the volatile issue of health care into the tax debate could made it harder to pass the bill.

Still, many Republican senators say they want the change.

Sen. Ted Cruz (R-Texas) pushed for the idea when leaving the meeting on Thursday.

Cruz did not say how he would vote on the current bill, saying discussions are “ongoing.”

Repealing the mandate would result in 13 million more uninsured people over 10 years, according to the CBO, and could destabilize health insurance markets.

More than Half of Uninsured People Eligible for Marketplace Insurance Could Pay Less for Health Plan than Individual Mandate Penalty

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Source: Kaiser Family Foundation

new Kaiser Family Foundation analysis finds that more than half (54% or 5.9 million) of the 10.7 million people who are uninsured and eligible to purchase an Affordable Care Act marketplace plan in 2018 could pay less in premiums for health insurance than they would owe as an individual mandate tax penalty for lacking coverage.

Within that 5.8 million, about 4.5 million (42% of the total) could obtain a bronze-level plan at no cost in 2018, after taking income-related premium tax credits into account, the analysis finds.

Most people without insurance who are eligible to buy marketplace coverage qualify for subsidies in the form of tax credits to help pay premiums for marketplace plans (8.3 million out of 10.7 million). Among those eligible for premium subsidies, the analysis finds that 70 percent could pay less in premiums than what they’d owe as a tax penalty for lacking coverage, with 54 percent able to purchase a bronze plan at no cost and 16 percent contributing less to their health insurance premium than the tax penalty they owe.

Among the 2.4 million uninsured, marketplace-eligible people who do not qualify for a premium subsidy, 2 percent would be able to pay less for marketplace insurance than they’d owe for their 2018 penalty, the analysis finds.

The Affordable Care Act’s individual mandate requires that most people have health coverage or be subject to a tax penalty unless they qualify for certain exemptions. The individual mandate is still in effect, though Congress may consider repealing it as part of tax legislation.

Consumers can compare their estimated 2018 individual mandate penalty with the cost of marketplace insurance in their area with KFF’s new Individual Mandate Penalty Calculator.

The deadline for ACA open enrollment in most states is Dec. 15, 2017.

The Senate GOP Tax Bill Keeps the Medical Expense Tax Deduction

Image result for senate tax bill imagesSource: The Washington Post

Let the negotiations begin.

The Senate Republican tax bill differs in a lot of ways from the House version. And one chief difference is the deduction for medical expenses. It’s left alone in the Senate bill. House Republicans want it gone.

“We are pleased that the Senate tax proposal includes some important improvements over the House bill voted out of the Ways and Means Committee,” AARP executive vice president Nancy LeaMond said in a statement. “The Senate proposal would keep the medical expense deduction for millions of Americans with high medical costs — something that is especially important for middle income seniors. The House tax bill repeals the medical expense deduction, resulting in a health tax for taxpayers who get sick or have chronic conditions.”

But the elimination of the medical deduction could still happen.

“If the full House and Senate approve different proposals, negotiators from the two bodies will hammer out a compromise version that both would have to approve before it can become law,” wrote Sabrina Eaton at cleveland.com.

Also of interest to seniors in the GOP tax bill is that “the Senate preserved the $5,000 dependent care tax credit to help working families offset the costs of care for their children and older dependents,” as Adam Shell for USA Today points reported.

Your voice matters, so let your congressional representative know what you like or dislike in the tax bill. Here’s some reading to help you sort through what’s on the table:

— GOP tax plans: 7 big differences between the House and Senate

— Winners and losers in the Senate GOP tax plan

— This GOP tax plan provision could be ‘catastrophic’ for seniors

Also, did you know that for seniors age 65 and older the threshold to meet the medical expense deduction for an itemized return was reduced to 7.5 percent for the 2013 to 2016 tax years? The threshold for other taxpayers is 10 percent of their adjusted gross income. A bipartisan bill – the Seniors Tax Hike Prevention Act of 2017— would allow for a two-year delay, thus keeping the medical expense deduction to 7.5 percent during that time.

“If this needed, bipartisan legislation does not pass soon, older taxpayers with high health costs will face a 2017 health tax hike due to a reduced medical expense deduction,” AARP chief executive Jo Ann Jenkins said in a statement last month. “The medical expense deduction helps millions of middle income older Americans to offset high out-of-pocket health care costs.”

Terri Corcoran of Falls Church, Va., like so many others, wrote to me about why the medical expense deduction is so valuable for families faced with enormous health bills: “My husband had a neurodegenerative condition, which rendered him totally disabled both mentally and physically within five years of our 17-year marriage,” Corcoran wrote. “I cared for him at home until his death last year. I employed home health aides for about 10 hours a day to help me care for him. I could not work because my husband needed my full-time care, in addition to the aides I employed. I loved my husband and was determined to keep him at home with me. We were fortunately able to afford the aides, because I was very careful with the money we had, and BECAUSE I WAS ABLE TO DEDUCT THESE EXPENSES TO LOWER MY INCOME TAX BILL. There are many family caregivers in this situation. Their medical expenses also include home adaptive renovations, health insurance, handicap equipment, doctor and drug expenses not covered by insurance, and more. Family caregivers SAVE the government by not accessing Medicaid. Family caregivers are caught between astronomical expenses and in many cases, the inability to work because of the caregiving demands.”

Keep your stories coming and any comments you have about how the GOP tax bill will impact your financial life. Send your comments to colorofmoney@washpost.com.

Retirement Rants and Raves
I’m interested in your experiences or concerns about retirement or aging. This space is yours. It’s a chance for you to express what’s on your mind. Send your comments to colorofmoney@washpost.com. Please include your name, city and state. In the subject line put “Retirement Rants and Raves.”

Maureen McLeod of Lake Como, Pa., wanted to rant about the GOP tax bill: “While tax breaks to working families are welcome by all, what will happen to retirees who are on fixed incomes? In my case, we are both retired. This tax plan seems designed to ultimately cause Social Security (and perhaps other programs) to become unsustainable in the near future. In the immediate future, it seems designed to force the middle class to subsidize the wealthy. It will greatly expand the already huge wealth gap between middle-income persons and those who are upper income. Hence, the Republican tax bill should be entitled, ‘Let them eat cake.’”

Stephen is concerned about any proposals to increase the full retirement age for Social Security. He writes: “Various politicians keep bringing up the idea of raising the retirement age. Well that may be fine for office workers. But not for blue-collar workers in the trades! It’s a fact that these jobs are hard on the body, often with shorter than average life spans. There’s no way I can keep doing my job satisfactorily much beyond 55 whereas a desk worker could easily do his or her work way beyond 55. It seems like class warfare to me!”

“Proposals to increase Social Security’s retirement age are beginning to resurface,” wrote Alicia Munnell. “The notion is that if people are living longer, they can work longer. But the retirement age has little to do with how long people work, and a lot to do with how much money they get. Increasing the retirement age is a benefit cut.”

Newsletter Comments Policy

Please note it is my personal policy to identify readers who respond to questions I ask in my newsletters. I find it encourages thoughtful and civil conversation. I want my newsletters to be a safe place to express your opinion. On sensitive matters or upon request, I’m happy to include just your first name and/or last initial. But I prefer not to post anonymous comments (I do make exceptions when I’m asking questions that might reveal sensitive information or cause conflict).

Trump Turns to Drug Industry for His New Health Secretary

Image result for alex azar imagesSource: ABC News

Turning to an industry he’s rebuked, President Donald Trump on Monday picked a former top pharmaceutical and government executive to be his health secretary.

If confirmed, Alex Azar would oversee a $1 trillion department responsible for major health insurance programs, including “Obamacare,” as well as medical research, food and drug safety, and public health.

The nomination of Azar is unusual because Health and Human Services secretaries have come from the ranks of elected officials such as governors, leaders in academia and medicine, or top executive branch managers — not industries regulated by the department.

“He will be a star for better healthcare and lower drug prices!” Trump tweeted in a morning announcement. Trump has a track record of making industry-friendly nominations, such as former ExxonMobil CEO Rex Tillerson as secretary of state and wealthy investor Wilbur Ross as secretary of commerce.

But Trump also has been a scathing critic of the drug companies, both as a candidate and as president.

Azar, 50, a lawyer by training, has spent most of the last 10 years with pharmaceutical giant Eli Lilly, rising to president of its key U.S. affiliate before leaving in January to start his own consulting firm. He’s also seen as an expert on government health care regulation.

As secretary, Azar would be returning to HHS after serving in senior posts in the George W. Bush administration. He would have to scrupulously avoid conflicts with Lilly’s far-reaching interests, from drug approval to Medicare reimbursement. The drugmaker has drawn criticism from patient advocacy groups for price increases to one of its biggest products: insulin, used to treat high blood sugar for nearly 100 years.

Azar’s earlier HHS nominations in the Bush era sailed through the Senate. This time, he’ll face Democrats wary of the administration’s unyielding quest to repeal the Affordable Care Act.

Top Democrats in Congress were skeptical, but also said they hoped Azar would bring a shift from an ideological hard line on “Obamacare.”

“It’s time to turn over a new leaf at HHS,” said Sen. Chuck Schumer of New York, the Democratic leader.

Sen. Patty Murray, D-Wash., flagged a potential conflict of interest, questioning how Azar “can fairly execute any significant effort to lower drug prices for patients.” Murray is the senior Democrat on the Health, Education, Labor and Pensions Committee.

But committee chairman Sen. Lamar Alexander, R-Tenn., cast Azar as a problem solver, saying “he has the qualifications and experience to get results.”

Insurers and for-profit hospitals also reacted positively, while the Public Citizen advocacy group likened Azar’s nomination to a “coup d’etat” by drug companies.

Americans consistently rank the high cost of prescription drugs among their top health care priorities, ahead of divisive issues like repealing former President Barack Obama’s health care law.

Trump has been a sharp critic of the industry. “The drug companies, frankly, are getting away with murder,” he said at a Cabinet meeting this fall. Prices are “out of control.”

In the spring, a Trump tweet sent drug stocks tumbling after the president said he was working on a new system that would foster competition and lead to much lower prices. In meetings with industry executives, however, Trump has focused on speeding up drug approvals, a cost-reducing tactic they would back.

Professionally, Azar has another set of skills that may be valuable to the president. In his previous service at HHS, the Yale law graduate developed an insider’s familiarity with the complex world of federal health care regulation, serving first as the department’s chief lawyer and later as deputy secretary.

Frustrated by fruitless efforts to overturn the Obama-era health law in Congress, Trump might see the regulatory route as his best chance to make a mark on health care.

If confirmed, Azar would join the club of Trump administration officials from big business. Ross was chairman of a private equity firm he founded and later sold. Treasury Secretary Steven Mnuchin was a former Goldman Sachs executive and hedge fund manager. Tillerson was CEO of ExxonMobil.

Admirers say Azar’s drug industry experience should be considered an asset, not a liability.

“To the extent that the Trump administration has talked about lowering drug prices, here’s a guy who understands how it works,” said Tevi Troy, who served with Azar in the Bush administration and now leads the American Health Policy Institute, a think tank focused on employer health insurance.

“Would (Azar) have been better off if he had been meditating in an ashram after serving as deputy secretary?” asked Troy.

Trump’s pick to lead the Food and Drug Administration, Scott Gottlieb, also faced scrutiny for receiving consulting payments from drugmakers and medical device companies while in the private sector. Once in office, Gottlieb pushed efforts to lower drug prices by reworking FDA drug reviews to increase competition.

Azar would be Trump’s second HHS secretary, replacing former Georgia congressman Tom Price, ousted after his use of private charter planes for government travel displeased the president.

Trump Again Wades Into Tax Debate, Suggesting Repeal of Obamacare Mandate

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Source: The New York Post

As Republican lawmakers worked on Monday toward a delicate compromise on a $1.5 trillion tax cut, President Trump threw himself back into the discussion, suggesting that Republicans could reduce taxes even further by repealing the Affordable Care Act’s mandate that most people have health insurance.

After a long day of meetings in the Philippines, Mr. Trump took to Twitter to congratulate House and Senate Republicans for making progress on tax cut legislation during his 12-day trip through Asia. Then he pressed them to change course.

“Now, how about ending the unfair & highly unpopular Indiv Mandate in OCare & reducing taxes even further?” Mr. Trump said, referring to the health law’s mandate that most people have coverage or pay a penalty. “Cut top rate to 35% w/all of the rest going to middle income cuts?”

Republicans have been navigating a challenging path in their effort to pass the most sweeping overhaul of the tax code in more than 30 years by the end of this year. Mr. Trump’s wishes, often expressed on social media, have at times steered the internal deliberations over the bill off course.

Mr. Trump’s latest suggestions came hours before the Senate Finance Committee met to begin its formal “markup” of the tax bill, a process that includes debate about the legislation and the consideration of amendments. The Senate majority leader, Mitch McConnell, Republican of Kentucky, said on Monday that he hoped the bill would be ready to be considered by the full Senate the week after Thanksgiving.

In recent weeks, Mr. Trump has called for including the repeal of the individual mandate in the tax bill. Doing so would save more than $300 billion over a decade and would allow Republicans to boast that they took a step forward in dismantling a law that continues to haunt them.

Representative Kevin Brady, Republican of Texas and the chairman of the Ways and Means Committee, said Mr. Trump’s opinion remained a factor as the House tried to pass its own tax bill this week.

“The president has already indicated to me a number of times that he’s really interested in including the individual mandate repeal,” Mr. Brady said. “It remains under consideration.”

Mr. Brady added that he was “very confident” that Republicans had the votes to pass the bill and that while he did not expect major changes to the legislation, there were important differences between the House and Senate bills that must eventually be bridged.

Mr. Trump’s Twitter messages about taxes have at times sowed confusion about the direction he wants to chart for the legislation.

The president said previously that he wanted Republican negotiators to allow for a higher individual tax bracket to make sure that the bill was sufficiently progressive. The House plan would keep a top rate of 39.6 percent for millionaires and the Senate plan has a top rate of 38.5 percent for high earners. But Mr. Trump suggested on Monday that lawmakers lower the top rate to 35 percent while also giving deeper cuts to the middle class.

Last month, lawmakers were considering making changes to 401(k) retirement accounts as a way to raise revenue before Mr. Trump quashed the idea on Twitter.

Although Mr. Trump must sign the eventual legislation, Republican lawmakers have shown a willingness to break with his wishes. Mr. Trump originally called for a 15 percent corporate tax rate, but Senate Republicans appear to have settled on a 20 percent rate that will be delayed by a year. Senate Republicans also have ignored Mr. Trump’s desire to fully eliminate the estate tax and, for now, they have not addressed the special treatment of “carried interest” that gives hedge fund managers and private equity partners lower tax rates on their income.

At the beginning of the Finance Committee’s markup, which is expected to last several days, the panel’s chairman, Senator Orrin G. Hatch, Republican of Utah, offered a pre-emptive defense of the bill, both in terms of substance and process.

Mr. Hatch dismissed Democrats’ complaints, based on an analysis from the Joint Committee on Taxation, that the bill would raise taxes on millions of middle-class families, saying critics were “missing the forest for the trees.”

“The talking point is that 13 million families in the middle class will see their taxes go up next year if the bill becomes law,” Mr. Hatch said. But, he said, critics should focus on the 90 percent of the middle class that would see a tax cut or no change under the bill.

He also suggested that the Senate bill would keep the corporate rate cut permanent as Republicans amend the bill in the coming days to comply with special budget rules that will protect it from a Democratic filibuster.

“There’s no real cause for concern at this point,” Mr. Hatch said. “But I do want to make clear that we’re looking at a number of alternatives that will fill the necessary gaps and we have every intention of making the business reforms permanent.”

Senator Ron Wyden of Oregon, the top Democrat on the Finance Committee, warned that Republicans had drawn up legislation that would hurt millions of middle-class taxpayers.

Because Republicans are planning to pass the bill under the rules that shield it from a filibuster, “they’ve got to squeeze several trillion dollars of tax handouts and corporate goodies into a $1.5 trillion box,” Mr. Wyden said. “That means telling the middle class in America to pay up.”

Individual Health Insurance Signups for Covered California Up 25 Percent on First Day

Image result for open enrollment images

Source: San Francisco Chronicle

The fifth open enrollment period under the Affordable Care Act is off to a strong start in California, with 5,900 people signing up for new health insurance plans on Nov. 1 — 25 percent higher than the first day of open enrollment in 2016, Covered California officials said.

Open enrollment runs through Jan. 31, and it is too soon to tell whether the pace of signups will continue, but the initial numbers are one early signal that Covered California’s aggressive ramp-up in advertising, marketing and outreach efforts is paying off.

Covered California is the state-run exchange through which 1.3 million Californians enroll in health plans. This year, it increased its marketing budget 5 percent to $111 million, while the federal government slashed its marketing spending for open enrollment almost 90 percent to $10 million.

Signups in the 39 states that use the federal exchange, HealthCare.gov, held steady compared to previous years — despite repeated declarations by President Trump that the health law is dying. About 600,000 people enrolled in new health plans during the first three days of open enrollment in those states, which is roughly on pace with previous years, according to data released by the Centers for Medicare and Medicaid Services on Thursday.

Children’s Health Bill Clears House as States Struggle to Keep Programs Afloat

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Source: New York Times

The House passed a bill on Friday that would provide five years of funds for the popular Children’s Health Insurance Program, over vehement objections from Democrats who opposed the way it would be financed.

The vote, 242 to 174, came a month after funds for the program expired.

The Senate plans major surgery on the legislation to avoid the partisan strife that split the House. But some states may have no choice but to freeze enrollment or start to shut down the program before Congress clears legislation to renew funding. No new funds have been available since Oct. 1.

In the House, 15 Democrats joined 227 Republicans in voting for the measure on Friday. Only three Republicans voted against it.

The bill would provide money for the Children’s Health Insurance Program and clinics known as community health centers, which care for low- and moderate-income people around the country. Both programs have enthusiastic support across the political spectrum.

But lawmakers clashed over how to pay for them. To offset the cost, the House bill would increase premiums for Medicare beneficiaries with income of more than $500,000 a year, remove some lottery winners from the Medicaid rolls, and cut $6.35 billion over 10 years from a fund established by the Affordable Care Act to pay for public health initiatives such as preventing diabetes, heart disease, cancer and opioid abuse.

In addition, the bill would end insurance coverage for several hundred thousand people who fail to pay their share of premiums for insurance purchased in marketplaces under the 2010 health care law.

Most people who buy insurance through the Affordable Care Act marketplace receive subsidies to help pay their monthly premiums. Under the law, if they do not pay their share of premiums, insurers must give them a three-month grace period before terminating their coverage. The House bill would reduce the grace period to one month unless a state specified a different period.

The Congressional Budget Office estimates that the government would save nearly $5 billion over a decade because fewer people would have government-subsidized coverage.

Republicans said some people were abusing the longer grace period to skip out of their financial obligations. But Representative Diana DeGette, Democrat of Colorado, said, “Nobody should have to lose coverage in order for others to keep it.”

“Colorado is likely to run out of CHIP funding in January, with termination notices going out to worried families in the next few weeks,” Ms. DeGette said. “Yet here we are with a partisan bill that asks us to pay for low-income children’s insurance on the backs of seniors and the most vulnerable.”

Republicans defended their path to pay for the children’s health program, especially the higher Medicare premiums. It was reasonable to require wealthy people to help defray the cost of care for children from families of modest means, they said.

“When you are making a half-million dollars a year, you can pay a little bit more,” said Representative Tom Cole, Republican of Oklahoma. “Warren Buffett and Donald Trump don’t need the same Medicare program that Ma and Pa Kettle living on Social Security do.”

Democrats, who often seek higher taxes on high-income people, denounced the proposal.

“I’m not worried about whether wealthy families can afford to pay increased Medicare premiums,” said Representative Debbie Dingell, Democrat of Michigan. “But I’m worried that these changes will result in wealthy people abandoning the program in large numbers, which would worsen the risk pool and ultimately increase the cost for middle- and lower-income seniors. It would fracture the universal nature of Medicare and put the entire program at risk.”

AARP, the lobby for older Americans, strongly supports the children’s insurance program, but tried to block the increase in Medicare premiums.

“Higher-income Medicare beneficiaries already pay more in monthly premiums,” Nancy LeaMond, an executive vice president of AARP, said in a letter to House members. In addition, she said, “higher-income seniors have been paying more into the Medicare program throughout their working lives.”

But Representative Greg Walden, Republican of Oregon and the chief author of the bill, said, “We are just asking the wealthiest seniors in America, those making $40,000 a month — not a year, a month — to pay about $135 a month more for their Medicare, so we can fund children’s health insurance for five years.”

Five states — Arizona, California, Minnesota, Oregon and Washington — have received emergency infusions of federal cash to prevent an interruption in coverage of children. But the amount of unused funds available for that purpose is far less than the expected need, and an independent commission that advises Congress warned this week that 29 states “will exhaust all available federal funds” by March unless Congress passed legislation to provide more money.

In the Senate, work on CHIP legislation has been bipartisan from the start. The Senate Finance Committee has voted to provide five years of funds for the program, but it has not specified a way to cover the cost.

The committee chairman, Senator Orrin G. Hatch of Utah, and Senator Ron Wyden of Oregon, the senior Democrat on the panel, have been discussing ways to pay for the bill. They have not reported much progress toward an agreement, but their talks hold more promise than negotiations between Republicans and Democrats in the House.

The Senate is unlikely to take up a free-standing CHIP bill. Funds could be included in a larger piece of legislation, perhaps a sprawling spending bill in December to keep the government open, senators say.

The House bill would send $1 billion in additional Medicaid funds to Puerto Rico as it tries to cope with damage from Hurricane Maria, and the island’s delegate in Congress, Jenniffer González-Colón, a Republican, endorsed the legislation.

Representative Frank Pallone Jr., Democrat of New Jersey, said Republicans had missed the deadline for renewing the children’s insurance program because they “chose to spend the first nine months of this year trying to repeal the Affordable Care Act.”

But Mr. Walden said Democrats were partly responsible because they had requested delays in hopes of finding other ways to pay for the legislation.

“We cannot wait any longer,” Mr. Walden said Friday. “Patients cannot wait any longer. Patients need care. These critical programs need funding. And we must move forward.”

Conservatives Push to Repeal Obamacare Mandate in Tax Package

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Source: Politico

Conservatives are attempting to revive efforts to gut Obamacare’s individual mandate as part of the Republican overhaul of the tax code.

But the House’s top tax writer, while leaving the door open to a measure President Donald Trump supports, said Friday that such a move would complicate the tax package’s prospects, particularly in the Senate.

“The president feels very strongly about including this at some step before the final process,” House Ways and Means Chairman Kevin Brady said of mandate repeal during a POLITICO Playbook interview. “No decisions have been made.”

Despite a public push last week by Sens. Tom Cotton (R-Ark.) and Ron Johnson (R-Wis.) to include repeal of the mandate in the tax package, tax bill writers didn’t include that in the measure released Thursday.

But a faction of lawmakers including conservative stalwarts Sen. Ted Cruz (R-Texas) and House Freedom Caucus Chairman Mark Meadows (R-N.C.) have continued to push for folding repeal into the bill.

That effort has been bolstered by Trump’s enthusiasm for using the tax vehicle to scrap the mandate.

“Wouldn’t it be great to Repeal the very unfair and unpopular Individual Mandate in ObamaCare and use those savings for further Tax Cuts,” he wrote on Twitter Wednesday.

Brady said that Trump has since pressed him on the issue once in person and twice over the phone.

“It’s a trend,” he joked.

Brady added that he’s asked for an updated analysis on the impact of repealing the individual mandate. A December 2016 CBO report projected that 15 million more people would be uninsured in 2026 if the mandate is repealed.

But with fewer people enrolled, the federal government would spend roughly $400 billion less over that period in subsidies designed to help individuals afford Obamacare plans. Those savings could represent an attractive addition to a tax bill currently expected to add to the federal deficit.

The mandate has also consistently polled as the most unpopular provision of Obamacare.

Still, Brady warned that mixing health care into an already-complicated tax bill could prompt new opposition and complicate its narrow path in the Senate.

“Importing health care into the tax reform debate has consequences, especially one where the Senate has yet to produce 50 votes on anything related to health care,” he said, stressing the importance of passing the tax overhaul in the wake of the GOP’s failure to deliver “on our promise of health care repeal.”

Senate Finance Chairman Orrin Hatch (R-Utah) has also expressed skepticism about muddying tax reform by pulling in the toxic politics of Obamacare.

Whether the mandate repeal makes it into House Republicans’ tax package or not, Brady said it will remain up to Senate Republicans to jump-start another effort at repealing and replacing Obamacare in full, after the chamber repeatedly fell short of winning the necessary 50 votes this summer.

“We want the Senate to produce something,” he said. “Find some improvement to get out of there and see if we can find some common ground.”

House GOP Tax Cut Bill Has Pluses and Pitfalls for Healthcare Stakeholders

Image result for tax cut imagesSource: Modern Healthcare

Healthcare companies, executives and professionals could enjoy lower business and personal taxes while facing reduced revenue due to Medicare and Medicaid cuts that may be used to pay for the tax reductions, under the House Republican tax reform bill released Thursday.

The 429-page Tax Cuts and Jobs Act—which congressional Republicans hope to pass quickly through the expedited budget reconciliation process with little or no Democratic support—would slash the corporate tax rate from 35% to 20%. That would benefit profitable companies like UnitedHealth Group, HCA and Universal Health Services, according to an analysis by Mizuho Securities.

The tax plan also would sharply raise the income threshold for individuals and families paying the top personal tax rate of 39.6%, to $500,000 for individuals and $1 million for married couples. In addition, it would abolish the alternative minimum tax. Those provisions would reduce personal income taxes for many healthcare executives and professionals.

But at the same time, the bill would cap corporate interest deductions at 30% of earnings before interest, taxes, depreciation and amortization. That could hurt companies carrying large debt loads such as Tenet Healthcare Corp. and Community Health Systems, which declined to comment on the bill.

“For companies that are profitable, the lower corporate tax rate is a powerful generator of cash flow,” said Sheryl Skolnick, managing director at Mizuho. “But for highly levered companies, the interest deduction is quite powerful for them in reducing their tax bill. If that deduction is no longer available, that would be a negative for money-losing companies with little cash flow to begin with.”

Healthcare industry groups will have to consider how the long-term budget impact of the tax cuts will affect broader health policies.

“This is clearly a package that will increase the deficit significantly,” said Matt Fiedler, an economist at the Brookings Institution’s Center on Health Policy. “Ultimately the lower revenues need to be financed by reduced federal spending. Since healthcare programs are a large portion of the budget, this will create pressure for cuts in those programs.”

The release of the House GOP bill Thursday was the first step in what’s likely to be a politically difficult process of passing a bill in the House and reconciling it with a separate Senate GOP tax bill scheduled for release as early as next week. The legislation is likely to come under heavy fire from various industry and consumer groups as well as Democrats as the winners and losers are identified.

But congressional GOP leaders and President Donald Trump believe they can’t afford another legislative failure following the collapse of their efforts to repeal and replace the Affordable Care Act. “We made a promise to deliver tax reform that creates more jobs, fairer taxes, and bigger paychecks,” House Ways and Means Committee Chairman Kevin Brady (R-Texas) said in a written statement accompany the bill’s release.

Paul Keckley, a veteran industry analyst, said healthcare companies will hold off on making any financial adjustments based on this bill because it’s certain to undergo substantial changes before anything is passed. “With all the darts that will be thrown at this thing, it’s a long way from the finish line,” he said.

Beyond the immediate tax impact, however, analysts cautioned that healthcare companies should beware of big cuts in Medicare, Medicaid and Affordable Care Act funding that Congress may consider to offset the revenue losses from the bill’s tax cuts. The House and Senate budget resolutions capped the 10-year cost of the tax cut package at $1.5 trillion.

A Democratic analysis of the Senate budget blueprint passed by Republicans last month found that it would cut Medicaid by $1 trillion and Medicare by $473 billion over 10 years.

“This massive tax cut for the rich would add trillions of dollars to the national debt, allowing Republicans to then come after Medicare, Medicaid, Social Security, and other middle-class priorities,” Sen. Patty Murray (D-Wash.) said in a written statement.

“There’s no way you can offset $1.5 trillion in tax cuts without looking at entitlements,” said Anders Gilberg, senior vice president for government affairs at the Medical Group Management Association.

He worried that if congressional Republicans seek to cut Medicare to recoup those revenue losses, that could destabilize the current transition of physicians from fee-for-service to value-based payment. “We’ll be looking at what the offsets are,” he said. “This sounds easy until you have tension between cutting taxes and being accountable for the deficit.”

Skolnick agreed that hospital leaders need to watch out for possible cuts in federal healthcare programs as a way to pay for the tax cuts. “Unless you pay a whole lot of whopping taxes, tax reform will be a net negative for the hospital sector, both for-profit and not-for-profit,” she predicted. “Careful what you wish for, you may get it.”

The American Hospital Association raised objections to two provisions of the bill affecting hospitals. One would stop treating tax-exempt bonds as investment property. The AHA warned that if hospitals’ access to tax-exempt financing is limited or eliminated, they would have a harder time investing in new technologies and renovations.

The other measure would impose a 20% excise tax on executive compensation above $1 million. The AHA said the law already requires a rigorous process for hospital boards to set compensation based on competitive market rates for top talent.

Physician groups were left behind on the bill’s provision reducing tax rates for pass-through entities. Passive owners of S corporations and limited liability corporations — the structures used by many medical groups — would be able to pay just a 25% tax rate rather than the 39.6% top rate for personal income. But medical groups and other professional service firms would not receive that reduced rate unless they were able to show the income was not labor-related.

“I’m disappointed we wouldn’t see a benefit for our members,” said Tina Hogeman, the MGMA’s chief financial officer.

She also worried about the bill’s $500,000 cap on home mortgage interest deductions, down from the current $1 million. “That’s a real problem for our members,” she said. “The average physician has a home that cost more than $500,000.”

A controversial provision of the House GOP bill that affects consumers is the proposed elimination of itemized deductions for high medical expenses, including long-term care costs. That deduction costs the Treasury about $10 billion a year. The AHA opposes ending that deduction.

The Brookings Institution’s Fiedler said that while the deduction isn’t well-targeted to help people with high medical costs, it’s a bad idea to repeal it to help pay for tax cuts for corporations and wealthier Americans.

“It could be sensible policy to repeal the deduction, but here it’s just financing regressive tax cuts,” Fiedler said.

Healthcare industry groups and supporters of the Affordable Care Act were relieved that the House GOP tax bill did not include provisions Republicans were considering to repeal the ACA’s individual mandate or erase the ACA’s taxes on wealthier people’s investment earnings. Those provisions could have undermined the individual insurance market and the financing for the law’s coverage subsidies.

“The bill is most notable for what’s not in there,” Fiedler said.

Last Updated 11/1/2017

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