Senate Needs To Move Fast On Healthcare Before Overhauling Tax Code

Somewhere beyond the cacophony over President Donald Trump’s firing of FBI Director James Comey is a steady, behind-the-scenes hum about healthcare, which won’t stay yesterday’s news for very long.

Analysts at Height Securities, LLC say the U.S. Senate has to deal with healthcare tax provisions in the version hastily passed last week by the U.S. House before it can tackle the GOP’s other signature proposal: overhauling the tax code.

Under Senate rules, the replacement of former President Barack Obama’s Affordable Care Act won’t be allowed to cost more than the House version, but it will take the Congressional Budget Office until May 22 to figure that out, Height said. (The House dispensed with a CBO review before passing its plan).

The CBO will then need about 10–14 days to review whatever the Senate comes up with.

“First, we now think timing for final resolution of the AHCA (American Health Care Act) in the Senate is unlikely until mid-June — we’re looking at the week of June 19 as the most likely for now – with resolution in the House still set in our view to take place shortly thereafter,” said the commentary by Stefanie Miller and Andrew Parmentier.

“Second, we now think Republicans in the Senate will be forced to seriously consider maintaining some sort of Medicaid per-capita cap system in order to ensure their version of the AHCA saves enough money so at least some of (Obamacare’s) taxes can be repealed.”

The Sticky Issue Of Extended Medicaid

Hardliners want to gut the option that let some states use Medicaid for people who could not buy into the Obama program. The Washington Post reported Thursday that a 12-member Senate working group is considering dropping the Medicaid option, which would slash millions of people off the health care rolls.

“Conventional wisdom says the Senate normally moves things left or more moderate, but this has been a year of the unexpected,” Tim Phillips, president of the conservative group Americans for Prosperity, told the paper.

The Height analysts, citing interviews with current and former Congressional staffers, said Senate Republicans can’t afford to let the debate drag on for too long, even though there a slew of differences within the party.

“First, GOP leadership and rank-and-file members are united in their desire to repeal as many of the ACA’s taxes as possible — particularly the 3.8 percent net investment income tax — as part of healthcare reform and NOT tax reform,” the commentary said.

“Their ideal outcome is to move AHCA on FY17 reconciliation instructions and tax reform on FY18 instructions – which is exactly what they are working toward now and why AHCA moving quickly is more likely.”

The tough part, Height said, will be trying to moderate the House version while still rolling back all of Obamacare’s taxes. A slower phase-out of the Medicaid expansion is one option; making states ration regular Medicaid coverage is another.

“With this latest realization that senators will need to match the level of savings in the House bill, it is likely that Senators will have even less room to moderate the House bill should they wish to maintain any of the tax repeal provisions (which we think they do).”