American Benefits Council
Benefits Byte


September 29, 2015

The Benefits Byte is the American Benefits Council’s regular e-mail and online newsletter for members only, providing timely reports on legislative, regulatory and judicial developments, along with updates on the Council’s activities in support of employer-sponsored benefit plans.

The Benefits Byte is published by the American Benefits Council, based on staff reports and edited by Jason Hammersla, Council director of communications. Contact information for Council staff related to specific topics can be found at the end of each story.

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Ways and Means Committee Votes to Repeal Elements of ACA Including 40 Percent Tax

In a “mark-up” session on September 29, the House Ways and Means Committee approved a reconciliation measure that repeals a number of key provisions of the Affordable Care Act (ACA). The committee voted 23-14, along party lines, to advance the committee report to the budget committee without amendment.

The Ways and Means reconciliation measure includes:

  • Repeal of the ACA individual mandate (Internal Revenue Code Section 5000A)
  • Repeal of the ACA employer “shared responsibility” mandate (Code Section 4980H)
  • Repeal of the 40 percent excise tax (the so-called “Cadillac Tax” on high-cost plans (Code Section 4980I)
  • Repeal of the medical device tax (Code Section 4221)
  • Repeal of the ACA’s Independent Payment Advisory Board, a panel of 15 outside experts tasked with recommending policies regarding Medicare.

A Joint Committee on Taxation (JCT) description and revenue estimate are now available.

Committee Chairman Paul Ryan (R-WI) called these “the five worst parts of Obamacare: two mandates, two taxes and one board of bureaucrats.” He referred to these provisions as “the core of the law, and the core of the problem as we see it.” 

During discussion, committee Democrats characterized the measure as the latest in repeated Republican attempts to dismantle the ACA, with comments focusing on the effect the measure would have on health insurance coverage writ large. Thomas Barthold, JCT chief of staff, told the Ways & Means Committee members that if the aforementioned changes to the ACA were enacted the number of uninsured is estimated to increase by 14 million people.  According to JCT estimates, the package reduces the deficit by $44.2 billion over ten years. 

As we have previously reported, the joint budget resolution passed by the House and Senate in April included instructions for a budget “reconciliation” process. Under Senate rules, a reconciliation bill cannot be filibustered but, rather, would only require a simple majority (rather than 60 votes) for passage in the Senate. (Republicans only have a majority of 54 seats in the Senate.) Reconciliation bills can only include provisions that have an effect on the federal budget.

Representative Sander Levin (D-MI), the committee’s ranking Democrat, called the exercise a politically motivated “waste of time,” since virtually all Democrats are likely to oppose the overall reconciliation measure and because President Obama is likely to veto legislation that repeals the ACA whole or in part.

In response, Rep. Pat Tiberi (R-OH) acknowledged that these provisions of the ACA are unlikely to be repealed with President Obama in the White House, but suggested that forcing the president to exercise his veto power may compel him to negotiate on issues with bipartisan support, such as the 40 percent tax.

Repeal of the 40 percent so-called “Cadillac Tax” is a Council priority. The Council – as part of its own advocacy strategy and as the organizer of the broad-based Alliance to Fight the 40 coalition– has already expressed its support for bipartisan legislation in the House and Senate to eliminate the tax (see the September 17 Benefits Byte). Repeal of the 40 percent tax has been re-estimated to cost $91.1 billion in foregone revenue over ten years.

In his closing statement, Ryan expressed concern the 40 percent tax and its future effect on employees. “Look at the Cadillac Tax. How many people have you talked to in your constituency who see this tax coming and is really afraid of losing their health care benefits?” he asked his colleagues on the panel. “How many employees have been told, ‘come 2018, you’re losing your health care plan because there’s no way we’re paying 40 percent tax on top of this.’”

Regarding the employer mandate, the Council recognizes that repeal of the employer mandate in the short term is very unlikely and has therefore focused attention on elements of that provision that continue to present administrative challenges for employers. In a package of legislative recommendations issued earlier this year, the Council suggested modifying the employer “shared responsibility” requirements to relieve the burdens on employers that, among other implications, create disincentives for employing "full-time employees" as defined by the law.

As we reported in the September 28 Benefits Byte, other House committees are expected to vote on budget reconciliation measures – with other ACA provisions – in the coming days. For more information, contact Katy Spangler, senior vice president, health policy, at (202) 289-6700.

The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.

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