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Many health care components still uncertain as tax bill negotiations continue

Lawmakers are trying to reconcile the differences between the Senate tax bill passed Saturday and the House bill passed Nov. 16, leaving many unanswered questions about the future of health care.

The Senate version keeps the medical expense deduction in place, but strips the individual mandate to have health insurance or pay a penalty as required by the Affordable Care Act. The nonpartisan Congressional Budget Office has predicted this change could lead to a 10% annual increase in premiums, with an estimated 4 million people dropping insurance by 2019 and 13 million by 2027.

In addition, the Senate bill would decrease the orphan drug credit from 50% to 27.5%, Sebastien Lasseur, policy specialist from Arnold and Porter, told Healio Internal Medicine.

Conversely, the House bill ends the medical expenses itemized deduction and repeals the orphan drug credit, Lasseur said.

“Because the Senate and House bills are estimated to add approximately $1.5 trillion to the deficit, they would trigger the statutory Pay-As-You-Go (PAYGO) rule (unless waived by 60 votes), which would require mandatory cuts to off-set the deficits,” he said.

“The Congressional Budget Office estimates that the Office of Management and Budget would be required to issue a sequester order to reduce mandatory spending in fiscal year 2018 by $136 billion,” he added. “This would lead to a 4% cut to Medicare, or $25 billion in fiscal year 2018. Because current PAYGO law exempts Medicaid, Medicaid would not be affected by these cuts.”

Differences between the House and Senate bills must be reconciled and the legislative texts for both chambers must be identical before the bill can go to the president, Lasseur said.

This may happen in one of two different ways, he said.

“After the House and Senate pass two different bills, congressional leadership appoints ‘conferees,’ who are charged with drafting a negotiated version of the bill, which is known as a conference report,” Lasseur said. “The conference report would then need to pass House and Senate.”

Or, “Both chambers pass the same version of the bill,” he said. “While congressional leaders have stated that they intend to reconcile the differences between the House and Senate tax bills through conferencing, it is possible that the House could vote on the Senate-passed bill.”

Lawmakers have said they want to get the reconciled tax bill to President Donald J. Trump before Christmas, according to Lasseur.

These new provisions in the Senate and House bills gravely concern several professional health care organizations, including the ACP. In a letter to congressional leadership, ACP outlined its concerns, noting that it is strongly opposed to the elimination of the individual mandate under the Senate bill.

Additionally, ACP noted that the repeal of the current-law deduction for medical expenses contained in the House bill is alarming and urged Congress to consider the Senate’s provision that would reduce medical expense deductions to 7.5% of an individual’s income instead. ACP also emphasized its concern with tax cuts mandated through sequestration, urging Congress to ensure that cuts and other initiatives do not sacrifice important public health programs, such as Medicare. – by Alaina Tedesco and Janel Miller

Disclosure: Healio Internal Medicine was unable to confirm relevant financial disclosures at the time of publication.