The measure, sponsored by Minnesota Rep. Erik Paulsen (R), would repeal taxes on medical devices that finance part of the cost of the coverage expansion provisions in the Affordable Care Act, and pay for the revenue loss by cutting into the subsidies offered to individuals and families who will purchase health care coverage in the new exchanges:
The $43.9 billion plan would “recapture” overpayments under a new health insurance tax credit to offset the estimated $29 billion in revenue that would be lost over the next decade by repealing the medical device tax. The repeal of that tax is a top priority for Minnesota’s large medical technology industry.
Republican leaders plan to introduce the downsized subsidy measure before the House votes on Paulsen’s bill later this week, GOP sources have told the Star Tribune.
The new GOP proposal would make people fully reimburse excess tax credits they receive under the new health care law’s government-sponsored insurance exchanges. Currently, eligibility can be based on 2-year-old tax returns, and there’s a cap on liability for overpayments.
The proposal would increase the amount families who are receiving health subsidies pay back the government if their incomes fluctuate throughout the year, and dissuade them from claiming credits in the first place.
Under current law, the premium support is paid out as an advance refundable amount to insurance companies based on an estimate of annual income (the assistance is available, on a sliding scale, to families of four making up to $90,000 a year). Should a family’s income change during the year, it will have to pay the government back a specific dollar amount come tax season. Congress has already increased that amount twice since health care reform was enacted into law and Paulsen’s measure would further raise the penalty by requiring an individual to pay the full amount of the overpayment.
The Joint Committee on Taxation has found that the policy would lead 350,000 people to lose coverage and could “especially hurt women.” A 2008 study by the Congressional Budget Office found that “women experience more large changes in earnings from year to year than men” and thus removing the repayment cap “will leave women who enrolled in coverage but had an income change mid-year…vulnerable to an unaffordable tax bill. As a result, hundreds of thousands of women will refuse coverage for fear of the repayment penalty,” the National Women’s Law Center has said.
But some lawmakers — particularly those who have received thousands from the medical device industry — are willing to increase health care costs for Americans in order to aid their campaign contributors.