There's an opportunity through the GOP tax revamp introduced yesterday to dramatically overhaul how most Americans get their health insurance. But Republicans aren't going there.
The single biggest carve-out in the U.S. tax code is for health plans offered by employers, who don't have to pay federal income or payroll taxes on their monthly premiums. This exemption -- created shortly after World War II as a way for employers to boost job benefits even amid wage controls -- has made employer-sponsored plans the chief source of health insurance for Americans. But it is also blamed for contributing to the country's health-care spending binge and costing people their health insurance whenever they change jobs.
You heard that right — the way to shift the U.S. health-care system back to one that's more market-driven, where people are encouraged to shop around for the best deal, is through a tax change, not through Obamacare repeal. The health-care bills Congress recently tried to pass would have affected the one-quarter of Americans who buy coverage on their own through the marketplaces created by the Affordable Care Act or via Medicaid. But way more people — about half of all Americans — receive health coverage through their jobs.
The biggest policy reforms are often the hardest, and that's true in this case. Even though most conservative and liberal health economists agree that decoupling health insurance from the workplace could improve the U.S. health-care system in the long run, employers overwhelmingly oppose the idea. And any such move would likely spark a massive public outcry from the 150 million Americans who get insurance through their jobs.
The tax draft that House Republicans released yesterday doesn't propose any changes to the employer exemption, even though Speaker Paul Ryan (R-Wis.) advocated capping the deduction in his “Better Way” agenda last year.
This is not just a Republican issue. Democrats also regarded capping or even scrapping the employer tax break as too politically risky as they were writing the ACA back in 2010. Instead, they decided to tax high-cost health plans through the "Cadillac tax," which didn't appear to hit Americans so directly.
There's another way Republicans have ducked controversy in their tax bill: by so far excluding a repeal of the ACA's individual mandate to buy coverage (something Trump is already pushing for on Twitter). Some conservatives, including Sen. Tom Cotton (R-Ark.), urged leaders to tack it on to the draft proposal, and the idea was even being tossed around Wednesday night as the final details were being crafted.
“I have what I will call maybe a creative idea, a novel idea, but one that I think is gaining momentum in the Senate and in the House,” Cotton told reporters yesterday. “We can repeal the individual mandate of Obamacare.”
But for now at least, the House tax plan doesn't try to touch Obamacare. That could change as Trump -- and conservative lawmakers and their allies in the interest group world -- keep pushing for a a long-sought victory in that arena.
Trump had demanded individual mandate repeal in two tweets Wednesday:
Wouldn't it be great to Repeal the very unfair and unpopular Individual Mandate in ObamaCare and use those savings for further Tax Cuts.....— Donald J. Trump (@realDonaldTrump) November 1, 2017
....for the Middle Class. The House and Senate should consider ASAP as the process of final approval moves along. Push Biggest Tax Cuts EVER— Donald J. Trump (@realDonaldTrump) November 1, 2017
Trump again told House Republicans in a meeting yesterday that he wants to roll back the individual mandate in the tax bill -- perhaps in the Senate, two lawmakers in attendance told the Hill.
"He just said he liked the idea and he had asked the senators about it and they said they were considering it," said Rep. Kristi Noem (R-S.D.), who participated in the meeting at the White House.
Don't get us wrong: The House tax bill contains plenty of other controversial elements that Republicans will have to navigate if they have any hope of passing a final restructuring into law. The measure slashes corporate and individual income tax rates and jettisons numerous tax breaks Americans and businesses have used for years to limit their costs, my colleagues Damian Paletta and Mike DeBonis report. In the coming weeks, lobbyists will be furiously pressuring Congress to protect their preferred deductions.
The tax bill does propose to do away with one health-care tax break — a deduction on medical expenses beyond 10 percent of gross income. The deduction particularly benefits low-income families in which someone has a serious chronic condition requiring high-cost medical equipment or therapy.
Per my colleague Glenn Kessler:
Eliminating medical deduction saves just $8 billion a year. And 70% of those who claim it make less than $75,000 a year, per JCT pic.twitter.com/0fVqMIZndy— Glenn Kessler (@GlennKesslerWP) November 2, 2017
From the top Democrat on the Senate Finance Committee:
Bottom line, this entire bill is about putting an economic double standard into black letter law – and the American people won’t like it.— Ron Wyden (@RonWyden) November 2, 2017
Cleaning up the tax code so you can lower overall tax rates might be a worthy goal -- it's riddled with exemptions, deductions and other loopholes that make filing taxes extremely complicated and cost the government tons of money every year. But for just about every carve-you try to repeal, there will be a an interest group fighting to protect it. Exactly so with the medical expense deduction:
No one should face a large tax increase simply because they have high medical costs. But that's what the Health Tax does. pic.twitter.com/K1pDX7J6U8— AARP Advocates (@AARPadvocates) November 2, 2017
8.6 million Americans count on this deduction for much-needed relief from high health care costs. A tax hike is the last thing they need.— AARP Advocates (@AARPadvocates) November 2, 2017
From Lisa Mascaro, who covers Congress for the Los Angeles Times and Chicago Tribune:
Here's a bunch of deductions getting repealed: medical, alimony, dependent care, moving expenses, adoptions.... pic.twitter.com/bu2kZalpxC— Lisa Mascaro (@LisaMascaro) November 2, 2017
Oh, and there's another tweak worth mentioning in the GOP tax proposal. Page 10 of the tax plan says parents can start a tax-exempt "529" college savings account for an “unborn child.”
“The provision provides that an unborn child may be treated as a designated beneficiary or an individual under section 529 plans,” the plan says. “An unborn child means a child in utero. A child in utero means a member of the species homo sapiens, at any stage of development, who is carried in the womb.”
That inclusion prompted praise from anti-abortion advocates. March for Life President Jeanne Mancini said she hopes lawmakers will also eventually expand the child tax credit to include the unborn. “A child in the womb is just as human as you or I yet, until now, the U.S. tax code has failed to acknowledge the unborn child,” Mancini said in a statement.
But Rep. Diana DeGette (D-Colo.), chairwoman of the congressional Pro-Choice Caucus, wondered this: “What’s next, giving a Social Security number to a zygote?”
Former CMS Administrator Andy Slavitt poked fun, too:
Here's a gem. Bill allows you to buy a 529 (college savings) plan.— Andy Slavitt (@ASlavitt) November 2, 2017
For your UNBORN child.
Yep, the tax code will define our species.2/ pic.twitter.com/R5IzgEag8o
One might pffer the suggestion they that they might want to first deal with actual human kids and pass CHIP.— Andy Slavitt (@ASlavitt) November 2, 2017
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AHH: If you listen to President Trump talk about the opioid crisis, you might think it's only a criminal justice issue. But the final report from his opioid commission rather surprisingly treats opioid abuse mostly as a medical issue, notably avoiding rhetoric indicating a return to the war on drugs, Vox's German Lopez writes.
“Consider the context,” German writes. “The commission was focused on a big drug crisis, established by a Republican administration, and chaired by a Republican governor — a recipe that just a few decades or even years ago would have guaranteed that much of the report would have focused on how to punitively crack down on drugs through the criminal justice system.”
Yet the commission mostly treats the epidemic as a public-health issue. Take this excerpt: “It is time we all say what we know is true: addiction is a disease,” the commission writes. “However, we do not treat addiction in this country like we treat other diseases. Neither government nor the private sector has committed the support necessary for research, prevention, and treatment like we do for other diseases.”
And just one of the commission's 56 recommendations is punitive. It suggests increasing penalties for fentanyl, a synthetic painkiller that is 50 to 100 times stronger than morphine. A few of the commission’s recommendation’s also call on law enforcement to target drug trafficking organizations and bolster efforts to intercept fentanyl being sent via mail.
German compares this language to a strategy blueprint released by the Office of National Drug Control Policy in 1989 during the cocaine crisis. “We should be tough on drugs — much tougher than we are now,” that report said. In a televised address about the issue, then-President George H.W. Bush spoke about drug abusers more as culprits, not as victims.
Of course, the commission’s recommendations are just that -- recommendations. German described the report as a “step forward” but it’s up to the Trump administration to act.
OOF: The House plans today to approve a bill funding the Children's Health Insurance Program, more than a month after funding for the program covering 9 million low-income kids technically expired. But Democrats are still refusing to support the measure because they don't like how it's paid for. "A partisan morass over how to pay for the legislation all but ensures that state governments and millions of children will get little relief from the uncertainty that has faced the programs since funding officially expired a month ago," the New York Times' Robert Pear reports.
It's a testament to the level of partisan rancor that grips Washington, Robert writes, since CHIP has typically been one of the few bipartisan areas of agreement in Congress. The lack of funding is sparking uncertainty among states, which depend on federal CHIP financing to keep their programs running. "Unsure when Congress will provide more funds, some states have begun drafting notices to inform families that they could lose coverage. And lawmakers have shown little urgency in responding," Robert writes.
Democrats and Republicans have agreed they want to fund CHIP for five years and community health centers for two years.The sticking point: Coming up with the $23 billion needed to pay for it all.
"House Republicans want to take money from a fund created by the Affordable Care Act that pays for a wide range of public health efforts, like preventing diabetes, vaccinating children, reducing the use of tobacco and fighting the opioid epidemic," Robert writes. It would also shorten the grace period for consumers who fail to pay their share of premiums for Obamacare premiums.
"Republicans say that some states have used the prevention fund as a slush fund, and that some consumers have abused the grace period to obtain a full year’s coverage while paying premiums for only nine months," Robert writes. "Democrats are outraged that Republicans insist on offsetting every dollar of new spending on the child health program while pushing a tax bill that could add as much as $1.5 trillion to federal budget deficits over 10 years."
OUCH: Officials at D.C.'s only public hospital failed to report to regulators key details about a patient left alone to die at the facility’s nursing home in August, the Post's Peter Jamison reports.
An incident report submitted to the D.C. Department of Health -- and obtained by The Post through a public records request -- left out information about the case of 47-year-old Warren Webb, which would likely have triggered an investigation of the long-term care unit at beleaguered United Medical Center. It didn't disclose that Webb died, let alone that he repeatedly cried out for help, complained of shortness of breath and was left lying on the floor for at least 20 minutes by his nurses after he rolled out of bed — details reported by The Post based on interviews with eyewitnesses and a time-stamped audio recording of the incident.
Instead, the Aug. 25 report says Webb “was lower [sic] to the floor in sitting position when observed sliding out of his bed” and “was encouraged to wait for staff before attempting to get out of bed by himself.” In response to a question on the reporting form that asks whether medical treatment was necessary, hospital officials wrote, “No.”
"The report’s omissions could intensify scrutiny of the hospital by D.C. lawmakers," Peter writes. "Next week the D.C. Council is scheduled to vote on whether it will renew a $4.2 million contract for Veritas of Washington, a politically connected consulting firm that has been running UMC since last year."
--One of Washington's least-kept secrets is the revolving door between federal agencies and the drug companies they regulate. Several Democratic senators want to crack down on how quickly people can rotate between the two worlds, our colleagues Scott Higham and Lenny Bernstein report.
Sen. Tammy Baldwin (D-Wis.) is lead sponsor on measure to establish a two-year period barring officials from the DEA and FDA from assisting drug companies with lobbying efforts. The legislation broadens the definition of “lobbying contact" to include activities such as strategy sessions. It also limits activities by pharmaceutical officials if they are hired to work in the federal government.
“The pharmaceutical industry has a deep-rooted and strong influence in Washington, and a revolving door between drug companies and government cannot undermine the safety of our communities,” Baldwin said.
The introduction of the bill follows a joint investigation by The Post and CBS’s “60 Minutes” that explored how a little-known provision in an Obama-era law crippled the DEA’s enforcement efforts. The legislation is co-sponsored by Sens. Dianne Feinstein (Calif.), Kamala D. Harris (Calif.), Ed Markey (Mass.), Maggie Hassan (N.H.), Jeanne Shaheen (N.H.) and Tom Udall (N.M.) and Baldwin said she plans to encourage Republicans to sign on as well.
--Three major hospital lobbying groups say they will sue the Centers for Medicare and Medicaid Services over a rule finalized this week that would cut what hospitals are paid under the federal 340B drug discount program. Currently, nonprofit hospitals that qualify for the program receive 6 percent more than the sale price of drugs. But the finalized rule cuts that payment down to 22.5 less than the sale price, which will result in a 1.6 billion decrease in payments, Axios reports.
The American Hospital Association, America’s Essential Hospitals and the Association of American Medical Colleges said they plan to sue over the rule, which indicates the Trump administration was siding with drugmakers and doctors who say hospitals are abusing the 340B program. It applied to just 1 percent of hospitals back when it was created in 1992, but has since dramatically expanded. By 2014 an estimated 45 percent of all Medicare acute care hospitals participated in the program, according to a 2015 overview by Medicare Payment Advisory Commission.
A few more reads from The Post and beyond:
DON'T MISS THIS: The Post and Live Nation will bring the “Can He Do That?” podcast to a live audience at the Warner Theatre on Tuesday, Nov. 7. In this live taping, political reporters Bob Woodward, David Fahrenthold and Karen Tumulty will join host Allison Michaels to review the past year in President Trump’s White House and the biggest moments that made people wonder “Can He Do That?” Tickets can be purchased now at Live Nation. Attendees will also receive a free 30-day digital subscription to The Washington Post.
MORE POST PROGRAMMING: The Washington Post hosts Secretary of Veterans Affairs David Shulkin for a discussion that will include his department’s efforts to curb the veterans’ suicide rate, address post-traumatic stress disorder and other health concerns on November 9.
- The Brookings Institution holds an event on policy approaches to the opioid crisis.
The American Enterprise Institute hosts an event on Puerto Rico after Hurricane Maria on November 6.
Axios hosts an event on a new era in cancer innovation with former Vice President Joe Biden and former first lady Jill Biden on November 8.
The American Enterprise Institute holds an event on the opioid crisis with Rep. Greg Walden (R-Ore.) on November 13.
STAT holds an event on the FDA on November 13.
Here's a video explainer on the House GOP's tax plan:
House Minority Leader Nancy Pelosi (D-Calif.) called the Republican's tax plan a "ponzi scheme:"
President Trump jokes that his mother would have never thought he would be president:
Seth Meyers takes a closer look at the GOP tax plan and President Trump's comments after the recent attack in New York: