Congress has approved a major overhaul of the US tax code, which signals the end of the Affordable Care Act (ACA) requirement that individuals purchase health insurance. The US House sealed the deal today with a 227 to 203 vote.
The legislation could possibly trigger automatic cuts to discretionary spending, such as spending for Medicare ― a possibility that reportedly has President Donald J. Trump threatening to withhold his signature until Congress takes action to avert the cuts.
The legislation (HR 1) will reduce most income tax rates for individuals, increase the standard deduction and the child tax credit, repeal deductions for personal exemptions, repeal or limit certain itemized deductions, and increase the exemption amounts for the individual alternative minimum tax.
One element that was set up to reduce tax rates for certain types of partnerships ― the small business pass-through provision ― will exclude physicians. The included partnerships will be able to claim income as corporate profits and effectively lower their individual tax rate to the corporate tax rate. But physicians and lawyers were exempted. Medicine could be hurt in other ways. HR 1 could add $1 billion to $1.5 billion to the deficit over the next decade, which could trigger automatic cuts to Medicare of $25 billion, according to the Congressional Budget Office (CBO). The cuts can be averted if the Senate finds a procedural way to avoid them, but so far, the legislators have not moved to do so.
The bill repeals the penalty for not complying with the ACA’s so-called individual mandate, starting in 2019. The CBO and the Joint Committee on Taxation (JCT) estimate that eliminating the penalty would reduce the deficit by $338 billon over the next decade, because it would reduce the number of people who would be receiving government subsidies for insurance. It would also mean 4 million more uninsured persons in 2019 and an additional 13 million more in 2027. Although the CBO and the JCT say the nongroup market would remain largely stable during the next decade, premiums for those purchasers would rise by about 10% in most years for the next 10 years, said the CBO and the JCT.
HR 1 moved swiftly through Congress in a series of votes that were decided largely along party lines. Not a single Democrat in either legislative body voted in favor of the legislation.
In the first vote, the House approved HR 1 by a vote of 227 to 203. The Senate then voted 51 to 48 to pass the bill. There was one abstention, John McCain (R-AZ), who was recovering from a recent hospitalization related to his glioblastoma.
After the Senate vote, the bill had to go back to the House, because several senators said that portions violated the so-called Byrd rule, named after the late Robert Byrd (D-WV). That rule essentially prohibits legislation that affects the budget from including nonbudgetary items. The Senate stripped out the offending provisions and sent HR 1 back to the House for a final vote on December 20.
House Speaker Paul Ryan (R-WI) commended his colleagues and said the legislation would eventually be heralded. “Americans are going to see relief almost immediately in the form of bigger paychecks and lower taxes,” he said in a statement.
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