by Christoper E. Condeluci, Principal and sole shareholder of CC Law & Policy PLLC in Washington, D.C.
ACA Taxes are FULLY REPEALED
- Yes, let me say that again: FULLY REPEALED. Most people here in DC were actually surprised that BOTH Democrats and Republicans agreed to FULL REPEAL of these taxes. But as stated above, when you think a little more about why these taxes were FULLY REPEALED, it was not so surprising.
- Analysis: Soooo, what ACA taxes were FULLY REPEALED?? (1) The Cadillac Tax, (2) The excise tax on insurance carriers (the “HIT Tax”), and (3) The excise tax on medical devices (the “Device Tax”). I know what you are saying right now: Chris, you told me that the Cadillac Tax will NOT be FULLY repealed. You speculated that – if anything – there could be another delay. BUT, you were even skeptical on that. Well, you are right. I did NOT think that we would see FULL repeal of the Cadillac Tax. Why? Because it costs close to $200 billion to FULLY repeal the Cadillac Tax. And, that is A LOT of dough. And, while Republicans have argued in the past that things like tax cuts or extending expiring tax preferences should NOT be offset, Republicans have specifically stated that they do NOT believe that the Cadillac Tax – in particular – should be FULLY repealed WITHOUT offsets. When it comes to Democrats, even though it was the Democrats who put the Cadillac Tax into the law in the first place – by enacting the Tax as part of the ACA – Democrats have been clamoring to get rid of the Tax for a LONG time now. Due in large part – if not entirely because – the labor community DESPISES the Tax. BUT, Democrats are NOT too keen on increasing the deficit when it comes to taxes. What I mean is, Democrats do NOT mind increasing the deficit when spending programs are part of the equation. BUT, when it comes to taxes – and in particular tax cuts or extending expiring tax preferences – Democrats WANT offsets. So, if you connect-the-dots, you become a skeptic. BUT, Capitol Hill is a weird place. And there are often times things that come out of left field – sometimes in the 11th hour – that actually make their way into the law when people least expect it. That is more-or-less what happened here. Note, I know that I am not the only one in DC who was surprised that FULL repeal of the Cadillac Tax actually happened. BUT, being “surprised” is different than being “shocked.” What I mean is this: Everyone in DC knows that the majority of BOTH Democrats and Republicans do NOT like the Cadillac Tax. AND, everyone in DC knows that – notwithstanding the points I made above about BOTH Democrats and Republicans wanting offsets (in certain cases) – BOTH Democrats and Republicans do NOT want to pay for FULL repeal of the Cadillac Tax. Soooo, because BOTH Democrats and Republicans want to get rid of the Cadillac Tax – AND – because BOTH Democrats and Republicans do NOT want to pay for it, BOTH Democrats and Republicans were finally willing to hold hands, close their eyes, and jump off of the bridge together, adding close to $200 billion to the deficit. Last comment: As I am sure you have picked up over the years, I have a personal attachment to the Cadillac Tax. And – NO – I do NOT like the Cadillac Tax. BUT, I did work on developing this Tax while I was on Senate Finance. So, it is kind of surreal, and kind of like the end of a chapter in my life. But enough about me, the employer community – and especially the labor community – are popping open the champagne and celebrating. And, it is a well-deserved celebration.
The HIT Tax and Device Tax Are FULLY Repealed
- In prior updates, I did suggest that the HIT Tax and Device Tax could be delayed again. BUT, I did NOT expect that these taxes would be FULLY repealed.
- Analysis: Again, it comes down to what I said above: BOTH Democrats and Republicans do NOT like these taxes – AND – BOTH Democrats and Republicans do NOT want to pay for FULL repeal of these taxes. Soooo, BOTH Democrats and Republicans were finally willing to hold hands, close their eyes, and jump off of the bridge together, adding about another $200 billion to the deficit. The positive that I see with FULLY repealing these taxes is that it is well-accepted – and well-established – that these taxes are “passed through” to the consumer, thereby increasing their premiums. Interestingly, the HIT Tax was NOT repealed for 2020. Rather, HIT Tax repeal only goes into effect in 2021. Why? Because the insurance carriers already baked these taxes into the 2020 premium rates that every consumer ALREADY paid during “open enrollment” (which is still going on in many States for individuals, and is ongoing for small employers). So, if the HIT Tax was repealed for 2020, this would only enrich the insurance carriers because they would be collecting the tax – in the form of increased premiums – but they would NOT be required to pay these extra amounts to the Federal government. Last comment: I too worked on the HIT Tax and the Device Tax when I was on Senate Finance. I did NOT like them then, and I do NOT like them now. So, even though FULL repeal of these taxes also marks the end of a chapter in my life, I am glad they are going away.
Surprise Medical Billing Update
Surprise Billing Gets Shelved
- As I mentioned in my last update, I was pessimistic that a surprise billing proposal would make its way into the end-of-year legislative package. Due in large part to the last-minute, competing proposal that the Ways and Means (W&Ms) Committee introduced last week (in response to the Senate HELP/House Energy and Commerce (E&C) Committee proposal unveiled about a week-and-a-half ago).
- Analysis: As you know, I have been preaching how important “savings” are when it comes to legislating. Why? Because BOTH Democrat and Republican Leadership typically like to offset spending increases and/or tax reductions. AND, any proposal that (1) shares bi-partisan support and (2) produces “savings” to the government is something that the respective Leaderships like to advance. I know what you are thinking: If BOTH Democrats and Republicans held hands, closed their eyes, and jumped off of the bridge together – adding close to $400 billion to the deficit by FULLY repealing the ACA Taxes – why didn’t the respective Leaderships include the Senate HELP/House E&C Committee proposal to at least offset some of the almost $400 billion (with $22 billion in savings)?? Answer: There was a SIGNIFICANT amount of push-back against the Senate HELP/House E&C Committee proposal from the provider community. The employer and insurance carrier community, on the other hand, could generally live with the proposal because they – like me – recognized that there had to be some sort of compromise that included an arbitration component to any proposal. BUT, because the provider community could NOT accept the Senate HELP/House E&C Committee proposal, the respective Leaderships opted against using the proposal as an offset until BOTH the providers and the employer/insurer community could generally settle on a surprise billing solution. Which leads me to say this: At least at this point, enacting some sort of surprise billing proposal is NOT dead. And, the respective Leaderships STILL want to use the “savings” that a surprise billing proposal may produce, even if the proposal is different from the Senate HELP/House E&C Committee proposal (and raises less than $22 billion). If this is true, when might the respective Leaderships decide to move a surprise billing proposal? Answer: May 22, 2020. What do I mean? The end-of-year legislative package extended a number of expiring provisions under Medicare and Medicaid. These expiring provisions are ALWAYS required to be offset, but the respective Leaderships did NOT have enough money to extend these provisions past May 22, 2020. As a result, when the respective Leaderships need to get back to legislating – and extending these expiring provisions – the respective Leaderships have signaled that they would like to further offset these provisions with a surprise billing proposal, and possibly some drug pricing and transparency provisions. We will believe it when we see it.
Health Policy Update
The 5th Circuit Court Finds the “Individual Mandate” Unconstitutional, But Not Necessarily the Entire ACA
- Okay, so here is another issue that you have heard me talk about – AND – speculate on possible outcomes. What did I say? I said that I do NOT see the ACA getting struck down as unconstitutional. My argument here is based on my belief that the “individual mandate” would NOT be found unconstitutional.
- Analysis: Does that mean I am wrong again?!? NO, not really. What I mean is this: I said that I do NOT believe that the Supreme Court finds that the “individual mandate” is unconstitutional. I actually did think that the 5th Circuit might find the “individual mandate” unconstitutional. Which we now know they did. This goes back to my point above: On the one hand, it was surprising to see the 5th Circuit find that the “individual mandate” was unconstitutional. BUT, on the other hand, considering the 5th Circuit is the most conservative Circuit Court in the country, it is NOT surprising that the 5th Circuit came down the way that it did. BUT – to me – it really does NOT matter what the 5th Circuit said because the ruling that the “individual mandate” is unconstitutional will NOT go into effect until AFTER the Supreme Court rules (provided the Supreme Court agrees, which I do NOT think they will…although I have been wrong before ;]). Also – at least to me – it really does NOT matter what the 5th Circuit said because the whole-kettle-of-fish here is whether the entire ACA is unconstitutional. The 5th Circuit did NOT rule on this point. Rather, the 5th Circuit sent this case back to the District Court to determine whether the entire ACA is unconstitutional (on account of the “individual mandate” being unconstitutional). Last comments: Because the District Court will NOW examine the question of whether the entire ACA is unconstitutional (on account of the “individual mandate” being unconstitutional) it is going to take a LONG time for the District Court to render a decision. Then – regardless of which way the District Court rules – the ruling will be appealed, which will take even LONGER for the Circuit Court to rule on the District Court’s decision. THEN, regardless of how the Circuit Court rules, the decision will likely be appealed to the Supreme Court, which will…well, you get the gist…That is a long way of saying this: In reality, since the 5th Circuit did NOT rule that the entire ACA was unconstitutional, this means that the ACA will REMAIN constitutional for quite a LONG time. Why? Because the question of whether the ACA is unconstitutional was kicked back to the beginning of the judicial process. It’s almost like the game of “Sorry.” Opponents of the ACA landed on the “square” of the supporters of the ACA, and they now have to “Go Back To Start.”