Top Takeaway from this week – (1) On Tuesday, Senate leadership announced the decision to include a repeal of the individual mandate in the Senate’s tax reform bill, however the House bill passed without including a repeal; and (2) over 875,000 people enrolled in coverage through Healthcare.gov during the second week of the ACA’s fifth open enrollment period.
President Trump has long advocated for a repeal of the individual mandate and, in the wake of failed repeal and replacement efforts, has encouraged Congress to include it in tax reform, In fact, on Monday, President Trump tweeted, “I am proud of Rep. House & Senate for working so hard on cutting taxes {& reform.}. We’re getting close! Now, how about ending the unfair & highly unpopular Indiv Mandate in OCare & reducing taxes even further? Cut top rate to 35% w/all of the rest going to middle income cuts?”
The next day, Senate Majority Leader McConnell (R-KY) announced that the Senate’s version of the tax reform bill would include language that would nullify the ACA’s individual mandate by reducing the penalty to $0. He noted, “We’re optimistic that inserting the individual mandate repeal would be helpful and that’s obviously the view of the Senate Finance Committee Republicans as well.” Finance Committee Chair Hatch (R-UT) noted in a statement that “By scrapping this unpopular tax from an unworkable law, we not only ease the financial burdens already associated with the mandate, but also generate additional revenue to provide more tax relief to these individuals.” Press releases: http://bit.ly/2iXMGf5 and http://bit.ly/2iYKRP4 Summary of Chairman’s modification: http://bit.ly/2iZ0MwW
According to last week’s analysis by the Congressional Budget Office, repealing the individual mandate would reduce the federal deficit by $338 billion from 2018 to 2017 due to lower enrollment in Medicaid and the marketplaces; this savings could then be used to offset the cost of other tax reform provisions. The CBO also found that coverage would be reduced by 4 million in 2019 and 13 million 2027, and that individual market premiums would increase by about 10 percent.
Despite prior difficulties in passing ACA reform legislation, Senate Republicans are confident that they have the 50 votes needed to pass the tax bill with the individual mandate repeal. However, Sen. Collins (R-ME) raised concerns yesterday that a repeal of the mandate would increase insurance premiums and said that she would need to study how the bill would impact her state. Sen. Murkowski (R-AK) has not yet stated her position, but noted that Sen. Collins’ concerns “…speak to the necessity of getting the Alexander-Murray piece enacted.” Sen. McCain (R-AZ) has indicated that repealing the individual mandate is not a deal-breaker, but cautioned, “I want to see the whole package – it keeps changing as it goes through the House and Senate. I want regular order.” Meanwhile, Sen. Johnson (R-WI) has said he will vote against the bill, but for reasons not related to the individual mandate.
Sen. Thune (R-SD) indicated on Tuesday that there is interest in also bringing up for a vote the Alexander-Murray market stabilization bill as part of the end of year spending package, which would provide payments to issuers for cost-sharing reductions in exchange for greater flexibility with respect to section 1332 State Innovation waivers. However, Senate Minority Leader Schumer (D-NY) warned that, “The Republicans cannot expect to pass their own separate ideological healthcare provision and then turn around and ask Democrats to vote to pass Alexander-Murray,” raising the possibility that the bill would fail if brought to a vote.
The House passed its tax reform bill today by a vote of 227-205. The House version does not include a repeal of the individual mandate. In describing his decision not to include the individual mandate, House Speaker Ryan (R-WI) noted, “We didn’t want to complicate tax reform and make it harder than it otherwise would be.” If the Senate is able to pass their version, the individual mandate will be one of the key differences worked out in conference.
Meanwhile, Senate Finance Committee Chair Hatch (R-UT) and Sen. Crapo (R-ID) are drafting a bill that would reform section 1332 state innovation waivers. The bill has not been introduced, but several news outlets posted a discussion draft (attached). The bill would allow Governors to apply for and implement a waiver without state legislature approval, would provide an expedited waiver application and review process, and would change the budget neutrality rules to allow for states to assess budget neutrality over a 5-year rather than a 10-year period and would allow for combined 1115 and 1332 budget neutrality assessments. The bill would also remove the current guardrails on section 1332 proposals, requiring only that the proposals be budget neutral and that “in the judgement of the Secretary, such waiver is likely to assist in promoting the objectives of affordability, market-based coverage for individuals seeking it, and consumer choice.” Notably, the bill would also allow private-exchanges to connect to the Federal Data Services Hub for the purposes of eligibility verifications.
Administration Action –
Yesterday, CMS released updated enrollment data for the second week of Open Enrollment, finding that over 875,000 people selected plans using Healthcare.gov, including over 208,000 new consumers, totaling nearly 1.5 million since the beginning of open enrollment. Press release: http://go.cms.gov/2iWLnx2