House & Senate Pass Budget Bill to Repeal ACA Insurance Tax, Delay DSH Cuts

December 2019 ~

Both the House and Senate have passed a bipartisan budget bill that would repeal the Affordable Care Act (ACA) health insurance tax in 2021, further delay hospital disproportionate-share (DSH) payment cuts until May 2020, and repeals three of the ACA’s most significant taxes: the health insurance tax, the Cadillac tax, and the medical device tax.

The legislation (H.R. 1865) passed the House by a vote of 297 to 120 and the Senate by a vote of 71 to 23. The budget is slated to fund the government through September 30, 2020, although several health care programs will expire near the end of May 2020.

Under H.R. 1865, repeal of the health insurance tax would not take effect until 2021 and will remain in effect for 2020. The Cadillac tax and medical device tax are repealed beginning in 2020. The Congressional Budget Office (CBO) projects repeal of the Cadillac tax will cost nearly $200 billion over 10 years. Earlier estimates from the CBO said repeal of the medical device tax would cost about $24 billion over a decade, while the IRS estimated earlier this year that repeal of the health insurance tax would amount to revenue losses of $15.5 billion just in 2020.

Other provisions included in the approved spending legislation include a one-year extension of the federal tax credit for employers providing paid family and medical leave through 2020, a 10-year extension of annual employer fees to fund the Patient-Centered Outcomes Research Institute (PCORI), along with program changes sought by employers, and bipartisan drug measure (originally in HR 965) that would make it easier for generic drug companies to access samples of brand-name drugs.

Source(s): Modern Healthcare; Health Affairs Blog; Washington Post; CQ News; United States Senate Committee on Appropriations;