Three taxes under Obamacare were suspended with the passage of the recent spending bill. A tax on medical devices, one on high-cost health care plans, and another on health insurance companies.
Republicans used shutdown
Cut more Obamacare funding
There was considerable bipartisan support for suspending these taxes.
The revenue from these taxes is one part of the funding for Obamacare. In 2017, Republican’s tried but failed to cut these taxes as a part of their ill-fated health care reform bills.
• These taxes were left to linger following the failure of Republican health reform in 2017.
The tax reform bill at the end of 2017 could not include them because it would have resulted in 32 million dollars in additional deficit. To maintain tax relief for corporations and the wealthy these Obamacare taxes were forgotten for the time being.
♦ Health insurance companies were not satisfied with received a nice corporate tax reduction, they wanted more. The major players UnitedHealth, Aetna and Blue Cross Blue Shield lined up against the health insurance tax.
• The tax is suspended until 2019.
The tax would be based on their revenue. They did not want to give up any profits from their tax cuts.
♦ Manufactures of medical devices complained about paying 2.3% on things like X-ray equipment, MRI machines and cardiac pacemakers. They spun their case around jobs. This terrible tax would cost jobs.
The lobbyists were out in force. Especially, in Illinois where GE Healthcare and Baxter Laboratories are headquartered.
• The tax was suspended until 2020.
♦ The tax on high-cost health insurance plans was an easy one to cut. It is more commonly known as the Cadillac tax. It was meant to discourage some larger employers who offer very robust health insurance to attract workers.
This tax was hated by both Republicans and Democrats. It actually was never enforced. Year after year it has been postponed.
• It is now suspended until 2022.
July 17, 2019 - The House voted 419 to 6 to repeal the Cadillac tax.
♦ The trick to killing these taxes was to hide them inside an unrelated bill like a spending bill.
Along came the spending bill the Democrats were willing to bite on. One with funding for the Children's Health Insurance Program (CHIP).
The government shut down and now the Democrats would have to give up something while these taxes could be used as “sweeteners” to attract the support of Republican conservatives in the House.
What happens now ?
This is no small loss but Obamacare has many parts and many funding sources. This will hurt but it will by no means kill Obamacare.
A loss of 32 million dollars is projected over the next 10 years. That loss will get shoved into the deficit without the 2017 tax cut getting blamed for this.
By increasing the deficit even more, Republican leaders like Paul Ryan will become more vocal about the need to cut social programs like Medicaid, Welfare and Social Security.
♦ The taxes are suspended not actually repealed. Which means, at the next go around of negotiating over funds they could very well be put back into play.
Outrage over corporate greed will likely force the next Democratic Congress to put the medical device and health insurance taxes back.