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Tax Reform Spurs Lawmakers’ Interest in Changes to Safety Net Spending, Individual Mandate Repeal

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Tax Reform Spurs Lawmakers’ Interest in Changes to Safety Net Spending, Individual Mandate Repeal

November 20, 2017

On November 16, 2017, the U.S. House of Representatives voted by a vote of 227 to 205 to pass the Tax Cuts and Jobs Act. Later that night the Senate Finance Committee, which has jurisdiction on this issue, voted to pass the Senate sister bill out of Committee after some tense exchanges between Republican and Democratic members. The next step is for the full Senate to vote on the bill before both the House and Senate meet to iron out differences and send a final bill to the President. The Senate is expected to vote on the tax reform bill by the end of December. ANCOR has been monitoring what  the effect that the $1.5 trillion federal deficit caused by the bill could have on the Medicaid should it go into effect.

At a Virginia town hall-like event the evening of November 15, House Speaker Ryan (R-WY) commented on the importance of growing the economy and making changes to entitlement programs, stating: “You cannot get the national debt under control, you cannot get that deficit under control, if you don’t do both — grow the economy, cut spending”. He continued by saying “We’ve got a lot of work to do in cutting spending.” Additionally on November 15, 2017 Finance Committee Chairman Orrin Hatch (R-UT) echoed this viewpoint in an exchange with Senator Brown (D-OH) during a hearing on tax reform (5 hour 51 minute mark of the video). Specifically, when Senator Brown asked Senator Hatch if, given the size of the deficit, entitlement reform would be next, Senator Hatch responded: “Well if there is a deficit and that happens then it very well could … Congress would have to work its will, that’s what Congress is for.”

In addition to the deficit, ANCOR has identified the following provisions in the tax bill which could impact people with disabilities and ANCOR members:

  • Repeal of the individual mandate for health insurance – House & Senate
    • CBO estimated savings of $338 billion over the next 10 years, but also result in 13 million fewer people with health insurance and premium hikes. The individual mandate and its associated penalties increase federal deficits by encouraging people to obtain subsidized coverage—through Medicaid, the health insurance marketplaces established under the ACA, or employment-based plans.  See CBO report.
  • Repeal of the architectural and transportation barrier removal deduction – House & Senate
  • Repeal of the disabled access credit – House only
  • Repeal of the work opportunity tax credit – House only
  • Reduced incentives for the charitable tax deduction – House & Senate
  • Elimination of the credits for private activity bonds in the low income housing tax credit – House only
  • Repeal of the medical expense deduction – House only. (Read our lobbyists’ concerns about this provision here.)
  • Repeal of the state and local tax deduction – Partial repeal in House, full repeal in Senate

A vote on the Senate version of the bill is expected next week after the Thanksgiving holiday. With the Senate version now expected to include a repeal of the Affordable Care Act’s individual mandate, the forecast for the bill has grown more complicated. Senator McConnell has expressed confidence he will have the 51 votes necessary to pass tax reform now that it contains a repeal of the individual mandate. With Vice President Pence coming in as a tie-breaker, Senator McConnell can afford to lose 2 votes out of his 52 vote majority; Senator Ron Johnson of Wisconsin (R-WY) is the first Republican Senator to announce his opposition to the bill. Senator Collins has also expressed concerns with the bill. Senator McCain, who was the third vote which defeated health care reform this summer, has not yet announced whether he will support tax legislation with health care repeal. The bipartisan Murray-Johnson bill may be proposed alongside of the tax reform bill because it contains market stabilizing policies, but under the reconciliation process the bills cannot be combined. However, despite these complicating factors, GOP Senators are under immense pressure to uphold the campaign promise of tax reform.

Please stay tuned for further notifications from ANCOR as tax reform advances to the Senate.