Senate Republican leaders moved Nov. 14 to include a repeal of the Affordable Care Act’s individual mandate in their tax bill, a major change of strategy as they try to accomplish two of their top domestic priorities in a single piece of legislation.
They also announced that the individual tax cuts in the plan would be made temporary, expiring at the end of 2025 to comply with Senate rules limiting the impact of legislation on the long-term deficit. A corporate tax cut, reducing the rate from 35% to 20%, would be left permanent.
The changes introduce volatile variables into what was already a challenging political enterprise for Republicans. And it’s unclear whether they will help or hurt the bill’s chances.
Repealing the mandate, which compels most Americans to buy health insurance or pay a fine, would free up more than $300 billion in government funding over the next decade that Republicans could use to finance their proposed tax cuts, but it would result in 13 million fewer people having health insurance, according to projections from the nonpartisan Congressional Budget Office.
The CBO has also projected that repealing the individual mandate would drive up insurance premiums for many Americans by roughly 10%.
Eliminating the individual mandate and having far fewer people signed up for insurance saves money because many of those people receive federal subsidies to buy coverage. Senate leaders are using those savings to address the concerns of anxious members from across their caucus who complained that the tax plan’s benefits for the middle class were too modest compared with benefits received by the wealthy and corporations.
Changes to the bill released Nov. 14 by the Senate Finance Committee indicated that the savings would be used in part to allow individuals to claim a larger $2,000 child tax credit, a priority of Ivanka Trump, the president’s daughter. They would also be used to modestly reduce income tax rates for middle-income taxpayers.
Senate Republicans also are seeking to deliver expanded benefits to “pass-through” firms that send profits to their owners to be taxed as individual income.
At the same time, by making the individual income tax cuts temporary, Senate leaders are seeking to ensure that the bill does not violate the chamber’s rules that prohibit legislation passed with fewer than 60 votes from raising the deficit after 10 years.
But while solving some problems, the changes Nov. 14 threaten new political problems of their own.
The attack on former president Barack Obama’s signature legislative achievement is likely to rule out the already slim possibility of support from Democrats, and the prospect of adding millions to the ranks of the uninsured could trouble moderate Republicans who voted down previous repeal efforts.
Sen. Susan Collins (R-ME), one of the Republicans who opposed earlier attempts to roll back the health-care law, said Nov. 14 that including the repeal measure “complicates” the tax effort. But she suggested she might be able to support it if the Senate also passes a bipartisan bill to preserve other aspects of the Affordable Care Act.
Sen. John McCain (R-AZ), who along with Collins and Sen. Lisa Murkowski (R-AK) voted down an Affordable Care Act repeal effort this summer, declined to say whether he would back a tax bill that included repeal.
Republicans control 52 votes of the 100-seat Senate, so the defection of three members would imperil any changes to the bill. Republicans are trying to pass the tax-cut bill through a process known as reconciliation, which requires only 50 votes—plus a tiebreaking vote from Vice President Pence—to pass the bill.
The Senate Finance Committee hopes to move a bill to the full Senate floor this week, with the entire chamber voting on it after Thanksgiving. The House plans to vote on its own version of the bill—which does not contain the individual mandate repeal or the sunsetting of the individual tax provisions—the week of Nov. 13.