House GOP Releases Tax Reform Plan

The House GOP unveiled their tax reform proposal last Thursday. The “Tax Cuts and Jobs Act” (H.R. 1), which would reduce the number of tax brackets and increase the standard deduction, also includes specific provisions that would impact patients and stakeholders in the health care industry. Most notably, the bill would eliminate the ability of individuals to deduct qualified medical expenses effective 2018. Under current law, individuals are allowed to deduct health care costs that exceed 10 percent of their adjusted gross income (AGI) for the year. The deduction is key particularly for elderly Americans in nursing homes and their families. The proposal also repeals the student loan interest deduction, available to anyone paying interest on student loans who make less than $80,000 per year. Many recent medical, nursing, and health professional school graduates benefit from the deduction. H.R. 1 would also eliminate the deduction for dependent care assistance, which makes day care, nursery school, and care for aging family members more affordable. In addition, the tax plan would eliminate the orphan drug tax credit, which allows drug companies conducting rare disease research to claim a credit equal to 50 percent of their clinical testing expenses when researching treatments for diseases that affect fewer than 200,000 Americans. Finally, the bill also raises additional questions for pharmaceutical and technology firms. H.R. 1 would impose a 20 percent tax on 50 percent of high foreign returns, appeared to be directed at companies with intangible off-shore income from things like intellectual property.

The tax plan does not include a provision to repeal the Affordable Care Act’s (ACA) individual mandate, which President Trump and some Congressional Republicans like Sen. Tom Cotton (R-Ark.) and House Freedom Caucus Chairman Mark Meadows (R-N.C.) strongly support repealing. The addition of this language became more likely with the release of the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) score, which indicated that there would be a potential Byrd rule problem in the Senate. The Byrd rule requires that all required deficits occur within the budget window. However, the analysis indicates that the plan adds $156 billion to the budget shortfall in 2027 – a sure sign that it would add to the deficit in 2028. While the House plan scores at $1.41 trillion over 10 years – below the $1.5 trillion maximum indicated in the budget resolution, without additional changes related to 2028 (such as changes to the individual mandate), Democrats will have an opening to raise an objection to the bill on the Senate floor that would require 60 votes to overcome. According to House Ways and Means Committee Chairman Kevin Brady (R-Texas), the individual mandate proposal is still under consideration. Some Republicans are obviously concerned that pairing tax reform with the health care debate could cause both to fail. The Ways and Means Committee will begin its markup of the bill today. As for the overall process, Chairman Brady has indicated that he will likely have a substantial amendment for Committee’s deliberations, while also stating that the time for amendments will be in the Committee, not on the House floor. Therefore, the Committee will need to address these larger budgetary and policy issues as part of the Committee deliberations.

Legislation to Provide EHR Regulatory Relief Reintroduced

The “Electronic Health Record (EHR) Regulatory Relief Act” (S. 2059) has been reintroduced in the Senate. The legislation aims to reduce the burden of meaningful use requirements through the creation of a 90-day reporting period, removal of the all-or-nothing scoring approach, and expansion of hardship exceptions. It would also eliminate a statutory requirement for the Secretary of the U.S. Department of Health and Human Services (HHS) to create more stringent measures of meaningful use. The legislation was introduced by Sens. John Thune (R-S.D.), Lamar Alexander (R-Tenn.), Mike Enzi (R-Wy.), Pat Roberts (R-Kan.), Richard Burr (R-N.C.), and Bill Cassidy (R-La.). The same six senators authored a 2013 report entitled “REBOOT: Re-examining the Strategies Needed to Successfully Adopt Health IT.”

Lawmakers Request Information on Flu Preparedness

Ranking Member of the Senate Health, Education Labor, and Pensions (HELP) Committee Patty Murray (D-Wash.) and Ranking Member of the House Energy and Commerce Committee Frank Pallone, Jr. (D-N.J.), joined by Sen. Elizabeth Warren (D-Mass.), Rep. Gene Green (D-Texas), and Rep. Diana DeGette (D-Colo.), have written to the Director of the Centers for Disease Control and Prevention (CDC) requesting information on the agency’s seasonal flu preparedness plans. The Democrats had requested this information earlier in the year, but have yet to receive a response. They point to warnings from public health officials about an especially bad seasonal flu this year and express particular concern for those displaced by recent natural disasters, who may be more vulnerable to infection. The letter requests a response from the CDC no later than November 16.

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