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Senate GOP Throws Health Care Curveball Into Tax Debate

Bid to repeal individual mandate to pay for tax cuts roils Capitol

Senate Finance Chairman Orrin G. Hatch is presiding over a tension-filled committee markup of the GOP’s tax bill. (Tom Williams/CQ Roll Call)
Senate Finance Chairman Orrin G. Hatch is presiding over a tension-filled committee markup of the GOP’s tax bill. (Tom Williams/CQ Roll Call)

A complicated tax overhaul debate got more complicated Tuesday when Senate Republicans injected health care politics into the equation. 

With a growing number of Senate Republicans seeking bigger tax cuts for individuals and families, but short of ways to finance it, GOP leaders gave the go-ahead to repeal the 2010 health care law’s mandate to purchase insurance to pay for their wish list

“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,” Senate Majority Leader Mitch McConnell said Tuesday after the weekly policy lunch.

One of his deputies, Republican Conference Chairman John Thune, said repeal of the health care law’s mandate would be part of a modified version of the tax overhaul the Finance panel released last week.

“Yeah, it’ll be distributed in the form of middle-income tax relief, it will give us even more of an opportunity to really distribute the relief to those middle-income cohorts who could really benefit from it,” said the South Dakota Republican, who is on the tax-writing committee.

Some Republicans, such as Sen. Susan Collins of Maine, have expressed concerns that including health care provisions in the emerging Senate tax bill could complicate its passage.

“My concern is that if we combine the health care issues with the tax reform, we make it far more controversial,” Collins said.

The Congressional Budget Office recently estimated that repealing the mandate would lower the federal deficit by $338 billion over the next 10 years, but would also result in 13 million fewer people with health insurance and premium hikes of 10 percent per year.

Watch: Hatch Asks Finance Committee to ‘Talk Like Gentlemen’

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Democrats pounce

The move brought immediate condemnation from the Finance Committee’s Democrats, who said Chairman Orrin G. Hatch and GOP leaders were not operating in good faith. 

“This redefines the scope of this markup. We didn’t know anything about this,” ranking member Sen. Ron Wyden said. “This is partial repeal of the Affordable Care Act.”

“You’re changing it every minute,” Washington Sen. Maria Cantwell said of the GOP tax plan.

Hatch urged the panel to defer debate on repealing the health care law’s mandate until Wednesday. “No one needs to be talking about the individual mandate at this point. It’s not part of the mark,” he said, even though it was certain to be part of his revised outline.

The Utah Republican denied a Democratic request to allow committee members to file additional amendments, now that the tax plan is expected to address a key part of the health care law. He said members would be allowed to modify more than 350 amendments filed before the markup began Monday.

Republicans also rebuffed complaints from Democrats that the Finance panel was now going beyond the initial bounds of the markup.

“My understanding is that the individual mandate is a tax collected by the IRS,” Thune said. “It seems to me it’s perfectly within this committee’s jurisdiction.”

Hatch said Tuesday his revised “chairman’s mark” would be released later in the day, but he did not provide specifics, even after Democrats pressed about timing. Shortly thereafter, he recessed the committee until 9 a.m. Wednesday.

More concerns

Even though it frees up more money for tax cuts, repealing the individual mandate comes with its own problems.

The GOP can only afford to lose the support of two of its members — assuming no Democrats support the tax measure. Some members may raise concerns that removing the mandate could undermine the current law and lead to higher health care costs.

The outcry over the health care mandate added to complaints waged by Democrats before the markup was suspended for the weekly Senate policy lunches. Many of the complaints stemmed from not seeing Hatch’s modifications to the tax plan.

“We are now asking questions on a bill that is not the bill,” Wyden said as Thomas Barthold, chief of staff for the Joint Committee on Taxation, began walking panel members through the 253-page chairman’s mark released last Thursday.

The chairman’s mark published last week must be revised to meet the budget reconciliation rules that the Senate GOP is using to advance its tax proposal with a simple majority vote.

The so-called Byrd rule mandates that no provision or title of the legislation can raise deficits outside the 10-year budget window.

Otherwise, those sections would be vulnerable to points of order, raising the threshold to 60 votes to keep those provisions in the bill. Republicans are aiming to make many of the tax cuts permanent, meaning they must find additional ways to pay for those measures outside the 10-year window to comply with Senate rules.

The House Ways and Means Committee approved its own tax plan last week, setting up a floor vote Thursday as House GOP leaders race to make good on their promise to pass a tax overhaul before Thanksgiving.

Senate Republican leaders have indicated their chamber will vote on its version after Thanksgiving. The two chambers will then need to work out significant differences in their plans in conference.

President Donald Trump has said he wants to sign a final tax bill into law before Christmas.

Rep. Mike Simpson said adding the individual mandate repeal at this stage would scare moderate House Republicans away from the tax bill.

“They’d lose votes by putting it in there,” the Idaho Republican said.

Making it palatable

One way Senate Republicans might seek to make the repeal of the mandate more palatable is to also consider a health insurance market stabilization measure spearheaded by Sens. Lamar Alexander, a Tennessee Republican, and Patty Murray, a Washington Democrat.

Rep. Tom Cole, a House leadership ally, said linking those issues could make the Alexander-Murray bill more appealing in the House. Many conservatives have characterized that bill as a bailout of insurance companies. 

“Something like that would make it much more attractive to people,” the Oklahoma Republican said. “I’ve always said for it to make it over here, it was going to have to have bigger reforms than it has now. So we need to really work that out. But that would make a difference.”

Alexander said repealing the individual mandate through a tax overhaul would likely increase the urgency to pass his and Murray’s measure on cost-sharing reduction payments on the health care exchanges, “because repealing the individual mandate would tend to increase rates,” he said.

Murray was having none of that, accusing Republicans of using the measure as “political cover.”

“Republicans should listen and back away from their plan to pay for tax cuts for the rich by spiking families’ premiums, cutting millions of people off of coverage, and injecting even more uncertainty into peoples’ health care,” she said in a statement.

“Instead, they should put our bipartisan health care bill on the floor as quickly as possible, without any attempts to sabotage it or use it as political cover to jam legislation through that would be devastating for patients and families. It would make absolutely no sense to stabilize health care with one hand while devastating it with the other,” she added.

Andrew Siddons and Kellie Mejdrich contributed to this report

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