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2017 Health Care Reform: House Republicans issue Manager’s Amendment to American Health Care Act

As anticipated, House Republicans have released a Manager’s Amendment to the American Health Care Act (AHCA), the plan to repeal and replace the Affordable Care Act (ACA, Obamacare). Although the amendment makes a number of substantive changes to the AHCA, such as accelerating the repeal of certain Obamacare taxes and lowering the floor for medical expense deductions to 5.8%, it remains uncertain whether the legislation will have sufficient support to pass the House.

For an article on the AHCA, as originally released, see Weekly Alert 6 03/09/2017. For the Congressional Budget Office’s (CBO’s) estimates of the AHCA’s fiscal and coverage impacts, see Weekly Alert 4 03/16/2017.

CBO is expected to release updated estimates reflecting the Manager’s Amendment in the coming days.

What’s changed? The Manager’s Amendment includes the following changes to the AHCA’s repeal of the ACA:

…It accelerates the repeal of the 3.8% net investment income tax (NIIT) under Code Sec. 1411 to 2017.

…It accelerates the repeal of the 0.9% additional Medicare tax under Code Sec. 3101(b)(2) to 2017, and includes a transition rule to accommodate employer withholding.

…It lowers the floor for medical expenses deductions under Code Sec. 213(a) to 5.8% and accelerates this relief to 2017.

RIA observation: This is lower than the original 7.5% floor. The section-by-section summary states that this “will provide additional support for Americans with high health costs—including low- and middle-income seniors,” who, according to CBO’s estimates, could face significantly increased costs under the AHCA.

…It accelerates the repeal of the limitation on health Flexible Spending Account (FSA) contributions to 2017.

…It delays the implementation of the so-called “Cadillac” tax on high cost employer-sponsored health plans under Code Sec. 4980I to 2026.

…It accelerates the repeal of the exclusion from “qualified medical expenses” of over-the-counter medications for purposes of Health Savings Accounts (HSAs, Code Sec. 223(d)(2)), Archer Medical Savings Accounts (Archer MSAs, Code Sec. 220(d)(2)(A)), Health Flexible Spending Arrangements (Health FSAs), and Health Reimbursement Arrangements (HRAs, Code Sec. 106(f)), to 2017.

…It accelerates the repeal of the ACA’s increase to the additional tax on HSAs (Code Sec. 223(f)(4)(A)) and Archer MSAs (Code Sec. 220(f)(4)(A)) for distributions not used for qualified medical expenses to 2017.

…It accelerates the repeal of the annual fee imposed on branded prescription drug sales (ACA Sec. 9008) to 2017.

…It accelerates the repeal of the medical device excise tax under Code Sec. 4191 to 2017.

…It accelerates the repeal of the annual fee on health insurance providers (ACA Sec. 9010) to 2017.

…It accelerates the repeal of the elimination of a deduction for expenses allocable to Medicare Part D subsidy under Code Sec. 139A to 2017.

…It accelerates the repeal of the 10% tanning tax under Code Sec. 5000B to June 30, 2017.

…It accelerates the repeal of the disallowance under Code Sec. 162(m)(6) of any deduction for “applicable individual remuneration” in excess of $500,000 paid to an applicable individual by certain health insurers to 2017.

With respect to the proposed Health Insurance Coverage credit, the Manager’s Amendment provides for “the technical restructuring of the new tax credit made as a result of Senate guidance.” The restructuring is to include “repealing and replacing Section 36B of the Internal Revenue Code [i.e., the premium tax credit] and removing a policy to allow excess tax credit funds to be deposited into an otherwise eligible individual’s health savings account.” As described in a press release issued by the Ways and Means Committee, the Manager’s Amendment “provides the Senate flexibility to potentially enhance the tax credit for those ages 50 to 64 who may need additional assistance.” According to Reuters, Republican sources who asked not to be identified said that House leaders will propose an approximately $85 billion fund for tax credits to help people in this age group get health insurance.

Finally, the Manager’s Amendment also makes a number of significant changes to the AHCA’s Medicaid provisions, including giving states the option of instituting work requirements for “able-bodied adults,” not allowing any additional states to opt into Obamacare’s Medicaid expansion, and letting states choose between per-capita funding and block grants.

Are the changes enough? As reported by Reuters, President Trump warned Republican lawmakers on Tuesday that they would face “political problems” for opposing the bill that repeals Obamacare.

“The president was really clear: he laid it on the line for everybody,” House Speaker Paul Ryan (R-WI), the leading proponent of the bill, told reporters. “We made a promise. Now is our time to keep that promise…If we don’t keep our promise, it will be very hard to manage this.”

While Republicans control both chambers of Congress, the party’s leaders face a difficult task in uniting their members behind the healthcare bill. Some conservative lawmakers believe the healthcare bill does not go far enough, calling it “Obamacare Lite,” while moderate Republicans worry it goes too far. House Freedom Caucus Chairman Mark Meadows (R-NC) has said that there are enough votes to derail the bill when it comes to the House floor. The Administration and House leadership can afford to lose only about 20 votes from Republican ranks or risk the bill failing since Democrats are united against it.

The House vote on the AHCA is slated for Thursday.


The American Health Care Act.

Manager’s Amendment, Section-by-Section Summary (Policy Changes).

Manager’s Amendment, Section-by-Section Summary (Technical Changes).

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