Senate Passes Tax Reform Legislation

The Senate passed its version of tax reform, the Tax Cuts and Jobs Act (H.R. 1) by a vote of 51-49 in the early hours of Saturday, December 2 along a party-line vote. The vote followed two days of debate and amendments.

The bill would add $1 trillion to the national debt over 10 years. Republican leadership has offered assurances that a waiver of the PAYGO rules, if required, would be included in a must-pass vehicle before the end of the year in order to prevent a sequester.

The Senate bill would repeal the Affordable Care Act’s (ACA) individual mandate, which would result in $300 billion in savings but is criticized for potentially destabilizing the individual health insurance market. A coalition of 19 patient groups, including the American Cancer Society Cancer Action Network, the American Diabetes Association, and the American Heart Association joined the list of health care stakeholders already in opposition to mandate repeal last week. The coalition argued that repeal of the mandate would result in an increase in the number of uninsured as well as an increase in individual market premiums.

A handful of Republican senators raised concerns with the tax legislation, citing its impact on the deficit, the possible repercussions of individual mandate repeal, and the effect it could have on small businesses. Ultimately, however, the only Republican holdout to vote against the legislation was Sen. Bob Corker (R-Tenn.).

Because the Senate bill differs significantly from the version of tax reform passed by the House, the two chambers will now hold a conference to reconcile the differences before both voting on a revised bill. Their goal is to send a final package to the President by the end of the year for his signature. Republican leadership in the House have suggested that repeal of the individual mandate is likely to be included in the final conference committee bill. President Trump has said that he will sign whatever tax bill is passed by Congress.

Collins Appears to Secure Deal on Stabilization Legislation

In a closed-door meeting with GOP senators last week, the President apparently promised support for two proposals aimed at stabilizing the Obamacare marketplace in exchange for the inclusion of individual mandate repeal in the Republican tax reform legislation. A proposal from Sens. Lamar Alexander (R-Tenn.) and Patty Murray (D-Wash.) would fund cost-sharing reduction (CSR) payments, while a bill from Sens. Susan Collins (R-Maine) and Bill Nelson (D-Fla.) would provide funding for the creation of state reinsurance programs. The agreement may have been key in securing the vote of Sen. Susan Collins (R-Maine) in favor of the tax reform package. Sen. Collins believes the bills will mitigate the effects of repealing the individual mandate on uninsurance rates and premiums. The Congressional Budget Office (CBO), however, reports that stabilization proposals would not substantially change the number of people with coverage or prevent increases in health insurance premiums. CBO estimates that repeal of the individual mandate would increase the number of uninsured by 13 million in 2027, while increasing premiums by 10 percent each year. Sen. Collins said that Majority Leader Mitch McConnell (R-Ky.) has promised to include the stabilization legislation in the year-end spending deal. This plan, however, is opposed by conservative members of the House and the House Freedom Caucus, who characterize the stabilization proposals as a bail out of the insurance industry.

Negotiations Slowly Progress on CHIP Funding

Funding for the Children’s Health Insurance Program (CHIP) expired over two months ago, and lawmakers are making slow progress on bipartisan negotiations to reauthorize CHIP and a number of other expiring health care programs. Some states are now relying on temporary cash infusions from the federal government to keep their programs operating.

Lawmakers are working toward an agreement on how to pay for the package, and Senate Finance Committee Chairman Orrin Hatch (R-Utah) -- one of the original authors of the program -- has pledged to not let the CHIP program run out of money. The package would extend funding for CHIP, community health centers, and other expiring Medicare programs. The Senate Finance Committee’s bipartisan CHRONIC Care Act might also be included in the final deal.

The CHIP package will likely be included in the longer-term funding bill Congress will debate before the end of the year. While the House has already passed a CHIP funding measure, the offsets are strongly opposed by Democrats. The Senate Finance Committee has also advanced a funding bill, but did not include any pay-fors in the measure.

States are using contingency measures to keep their programs functional, and the Centers for Medicare and Medicaid Services (CMS) has distributed nearly $607 million in unspent funds from prior years to states and territories in October and November. Five states and the District of Columbia could run out of CHIP money by early January, and some locations have begun notifying enrollees that coverage for their children could lapse. In addition, community health centers have begun hiring freezes and are examining their ability to scale back services in light of the funding uncertainty.

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