Senate Health Care Reform Bill May Keep Some ACA Taxes, Shorten Delay Of Cadillac Tax

June 16, 2017

The Senate is considering keeping some Affordable Care Act taxes for a longer period than the House-passed bill in order to pay for more generous tax credits for buying insurance, extend the time for phasing out the Medicaid expansion, and add $45 billion over 10 years to fight opioid abuse.  Sen. John Thune (R-SD), Chairman of the Republican Conference, said: "I think most of the taxes are going to go away for sure—the taxes that affect consumers, your tax on prescriptions, tax on medical devices, tax on insurance plans—but our members are still having a conversation about if we want to make changes that are in the end going to require some additional revenue, where that might come from."  Sen. Bill Cassidy (R-LA) went so far as to suggest that repealing the ACA's taxes should not be addressed in the Senate health care reform bill, but instead be part of the upcoming tax reform debate.  At this point, the ACA taxes most likely to be repealed outright in the Senate bill would be those that have the most direct impact on the premium costs for individuals and employees in 2018, and the least likely are the two Medicare-related taxes on high-income families and individuals, which could be phased out more slowly.  While the House bill delayed implementation of the Cadillac Tax from 2020 to 2026, the Senate could dial that back to 2022 or 2024, which would generate $30 billion to $50 billion in additional revenue that could be used to fight opioid abuse.  However, what the Senate finally does on ACA taxes will be determined by how much more its bill will cost than the House-passed measure and the budget reconciliation requirement to reduce the deficit by at least $133 billion over ten years.