SPRAYFOAM Professional - Fall 2017 - 17
THE BRIGHTUP WRITE-UP...
BRINGING THE BELTWAY TO YOU
BY CRAIG BRIGHTUP, THE BRIGHTUP GROUP LLC
HEALTH CARE REFORM
IMPACTS TAX REFORM
n my last update, I wrote that House
Republicans were "sifting through
the wreckage of their bill to repeal and
replace Obamacare" because they had
pulled it from the House floor in what
looked to be the end of the line. But, in
an impressive comeback, the American
Health Care Act of 2017 returned to the
floor with changes and was passed by
the House in May.
As we go to print, the Senate health
care bill (the Better Care Reconciliation
Act of 2017) has yet to pass and differs from the House bill in some areas.
However, the bills are more similar
than critics suggest, particularly with
regard to cutting most Obamacare taxes
and reforming the Medicaid program.
Dispensing with these two items is very
important sequentially to the broader
issue of tax reform, because they're
"turnkeys" that will make tax reform
easier for Congress to achieve.
The Senate legislation largely mirrors the House bill in that it would end
the tax penalties tied to individual and
employer health care mandates by
repealing the mandates altogether, and
boosts what can be given annually to
health savings accounts (HSAs). But only
the House bill would also eliminate the
3.8 percent tax on investment income
and 0.9 percent Medicare payroll tax
surcharge on incomes over $200,000 for
individuals and $250,000 for married
couples that file jointly.
Both the Senate and House would
eliminate a tax on drug makers, as
well as a tax on insurers (the Health
Insurance "HIT" Tax) that's been
delayed and would have fallen disproportionately on small businesses in
the fully insured market. In addition,
both bills would repeal the 2.3 percent
tax on the sale of medical devices (the
Medical Device Tax) that's also been
delayed by Congress.
Finally, while the Senate and House
would repeal a 10 percent tax on indoor
tanning services (tanning beds), both
kicked the can down the road for highend employer health insurance plans
commonly referred to as "Cadillac"
plans. The Cadillac tax doesn't go into
effect until 2020 due to lobbying by
businesses and unions, and would
impose a 40 percent tax on employers for annual premiums that exceed
$10,200 for individual policies and
$27,500 for family plans. The Senate
and House bills would further delay it
While the details of these tax cuts
- and delays - might ultimately vary,
the main goal for Republicans is to
pass health care reform legislation
that dispenses with them in order to
establish a new revenue baseline for
comprehensive tax reform. And the
key to facilitating such tax reform is
the savings anticipated by both the
Senate and House from restructuring
the Medicaid program.
Like the House bill, the Senate would
send the states a fixed amount of money
per Medicaid enrollee, or states could
opt to receive block grants regardless
of the enrollees. States have shown
the ability to realize greater efficiencies administering the program, thus
generating savings, and would have
the option of requiring able-bodied
Medicaid recipients to work.
The Congressional Budget Office
estimates $900 billion in savings from
these changes, including phasing out
enhanced federal funding for Medicaid
expansion under Obamacare. This will
provide a "down payment" and more
leeway for tax reform, and explains why
Congress put health care reform before
tax reform. o
Craig Brightup is chief executive officer
of The Brightup Group LLC, a government relations firm in Washington, D.C.
He has provided services for 18 different
organizations since 2009, including the
U.S. Chamber of Commerce and National
Roofing Contractors Association.
While the details of these tax cuts - and delays
- might ultimately vary, the main goal for
Republicans is to pass health care reform legislation
that dispenses with them in order to establish a new
revenue baseline for comprehensive tax reform."
| SPRAYFOAM PROFESSIONAL 17