Congressional a Research Serwce Informing the legislative debate since 1914 MEMORANDUM November 17, 2015 To: ttention From: Annie Mach, Analyst in Health Care Finance, 7-7825 Subject: The Restoring Americans? Healthcare Freedom Reconciliation Act (HR. 3762) and Full Repeal of the Affordable Care Act This memorandum is a response to your request for information about The Restoring Americans? Healthcare Freedom Reconciliation Act (HR. 3762) and full repeal of the Patient Protection and Affordable Care Act PL. 111?148, as amended). The memorandum is divided into three parts, based on the specific information you requested: 0 a summary of the budgetary effects of HR. 3762 and full repeal of the ACA, as estimated by the Congressional Budget Of?ce (CBC) and the Joint Committee on Taxation 0 lists ofthe provisions in HR. 3762 and in full repeal of the ACA that CEO and JCT have identi?ed will affect federal outlays and revenues; and list of the provisions included in Title IX of the ACA that were estimated to increase federal revenues and whether they would be repealed by HR. 3762. Information in this memorandum is largely from CEO and JCT cost estimates. Speci?cally, the information is from their cost estimate for HR. 3762, as passed by the House and following enactment of the Bipartisan Budget Act of 201 5, issued November 2, 2015,1 and their estimate of full repeal ofthe ACA, issued June 19, 2015.2 This memorandum reports the information CEO and JCT provide in their cost estimates; it does not provide analysis of or additional details for the cost estimates. For questions about the cost estimates, please refer to the source documents or contact CEO or JCT directly. Summary of the Budgetary Effects of HR. 3762 and Full Repeal of the ACA HR. 3762 would repeal several provisions of the ACA.3 These provisions are as follows: I the individual mandate; 1 CBC and JCT, Estimate of Direct Spending and Revenue E??ects of .R. 3762. The Restoring Americans' Healthcare Freedom Reconciliation Act, As Passed by the House and Following Enactment of the Bipartisan Budget Act of 2015, November 2, 2015. 2 CBO and JCT, Budgetary and Economic E?ects of Repealing the A?ordable Care Act, June 19, 2015. 3 For information about the provisions in HR. 3762 and some of the policy implications of the bill, see CRS Report R44238, Potential Policy Implications of the House Reconciliation Bill (HR. 3762). coordinated by Annie L. Mach. Congressional Research Service 15700 Congressional Research Service 2 I the employer mandate; the excise tax on high?cost employer-sponsored coverage (the Cadillac tax); 0 the medical device tax; 0 the auto-enrollment requirement for large employers; and the Prevention and Public Health Fund (PPHF). Additionally, HR. 3762 could restrict federal funding for the Planned Parenthood Federation of America (PPFA) and its affiliates and clinics for a period of one year. The bill also would appropriate an additional $235 million for each of 6 and FY2017 to the Community Health Center Fund. Table 1 shows the impact that HR. 3762 would have on the federal de?cit, excluding any macroeconomic effects, as estimated by the Congressional Budget Of?ce (CBO) and the Joint Committee on Taxation (JCT). According to CEO and JCT, HR. 3762 would reduce federal de?cits by $78.1 billion over the 2016-2025 period. Table 1 also shows the impact that full repeal of ACA would have on the federal de?cit, excluding any macroeconomic effects. The CEO and JCT estimate that full repeal of the ACA would increase the federal de?cit by about $353 billion over the 2016-2025 period. Table I. Summary of Federal Budgetary Effects (Without Macroeconomic Feedback) for H.R. 3762 and for Full Repeal of the ACA (effects in billions of dollars) 20 I 6-2025 Period H.R. 3762 Full Repeal of the ACA Effect on Outlays -$289.6 Effect on Revenues I74 Effect on De?cit -$78.l $353 Source: The budgetary effeCts of full repeal of the ACA are from C305 and JCT's Budgetary and Economic Effects of Repealing the Affordable Care Act, June I9, 20 I 5. The budgetary effects of HR. 3762 are from C305 and JCT's Estimate of Direct Spending and Revenue Effects ofH.R. 3762, The Restoring Americans? Healthcare Freedom Reconciliation Act, As Passed by the House and Following Enactment of the Bipartisan Budget Act of 20l 5, November 2, 20 5. Notes: ACA Patient Protection and Affordable Care Act (P.L. l-l48. as amended); HR. 3762 The Restoring Americans? Healthcare Freedom Reconciliation Act, as passed by the House, and following enactment of the Bipartisan Budget Act of 20 5 (FL. l4-74). Provisions That Affect Revenues and Outlays The CEO and JCT cost estimates for HR. 3762 and full repeal of the ACA provide detailed information about how provisions would affect revenues and outlays. For HR. 3762, these details are provided in Table 2, and they are provided in Table 3 for full repeal of the ACA. The budgetary effects in both tables are reported without macroeconomic feedback, and both tables include statutory references, where appropriate. Congressional Research Service 3 Table 2. Provisions of HR. 3762 that Affect Federal Outlays and Revenues (Without Macroeconomic Feedback) (budgetary effects in billions of dollars) Provision Budgetary Effect (20 I 6-2025) Statute Effect on Outlays Auto-enrollment for Certain Large Employers $0El 29 U.S.C. Sec. 2 8a Prevention and Public Health Fund 42 U.S.C Sec. 300u-I I Medicaid Community Health Center Program $0.5 Repeal Individual Mandate ?$258.9b 26 U.S.C Sec. 5000A Repeal Employer Mandate 26 U.S.C Sec. 4980H Repeal Excise Tax on High-Premium Insurance Plans 26 U.S.C Sec. 4980 Effect on Revenues Repeal individual mandate -$90.4b 26 U.S.C Sec. 5000A Repeal employer mandate 26 U.S.C Sec. 4980H Repeal medical device tax -$23.9 26 U.S.C Sec. 4l9 Repeal excise tax on high-premium insurance plans 26 U.S.C Sec. 4980l Interactionsc 2.l Source: The budgetary effects of HR. 3762 are from CBO's and JCT's Estimate of Direct Spending and Revenue Effects of HR. 3762, The Restoring Americans' Healthcare Freedom Reconciliation Act, As Passed by the House and Following Enactment of the Bipartisan Budget Act of 20! 5, November 2. 20 5. CR8 provided the statutory references. Notes: U.S.C. United States Code. a. CEO and JCT estimate that the provision will have no effect relative to current law because an identical provision (repeal of the auto-enrollment requirement) was included in the Bipartisan Budget Act of 20 5 (PL. l4-74), which was enacted November 2, 20l5. b. CBC and JCT provide one estimate for repealing both the individual and employer mandates. c. C80 and JCT specify that the interactive effects are among the following provisions: repeal of the individual and employer mandates; repeal of the excise tax on certain high-premium insurance plans; and repeal of the medical device tax. Table 3. Provisions of Full Repeal of the ACA that Affect Federal Outlays and Revenues (budgetary effects in billions of dollars) Budgetary Effect (20 I 6- Provision 2025) Statute Effect on Outlays Coverage Provisions Exchange Subsidies and State Exchange Premium credits: 26 U.S.C. Sec. 363 Grants Cost-sharing reductions: 42 U.S.C. Sec. 807 Exchange grants: 42 U.S.C. Sec. 803 Payments for Risk Adjustment and 58 Risk adjustment: 42 U.S.C. Sec. 8063 Reinsurance Congressional Research Service 4 Budgetary Effect (20 I 6- Provision 2025) Statute Reinsurance program: 42 U.S.C. Sec. 806 Medicaid and the State Children?s -$824 Health Insurance Program (CHIP) Other Changes in Direct Spendinga Small-employer tax credits: 26 U.S.C. Sec. 45R Other Provisions Medicare Provisions $802 Other Medicaid Provisions $66 Other Changes in Direct Spending IO Effect on Revenues Coverage Provisions Exchange Premium Credits $ 09 Premium credits: 26 U.S.C. Sec. 363 Collections for Risk Adjustment and 57 Risk adjustment: 42 U.S.C. Sec. 18063 Reinsurance Reinsurance program: 42 U.S.C. Sec. l806l Small-Employer Tax Credits 0 Small-employer tax credits: 26 U.S.C. Sec. 45R Penalty Payments by Uninsured People -$43 26 U.S.C. Sec. 5000A Penalty Payments by Employers 67 26 U.S.C. Sec. 4980H Excise Tax on High-Premium -$87 26 U.S.C. Sec. 4980i Insurance Plans Other Changes in Revenues -$209 Other Provisions High-income Surtaxes -$346 Fees on certain manufacturers and 96 Medical device tax: 26 U.S.C. Sec. 4l9 insurersb Annual fee on health insurers: Sec. 90 0 of ACA Annual fee on manufacturers and importers of branded drugs: Sec. 9008 of ACA Other Revenue Provisions -$89 Source: The budgetary effects are from C305 and JCT's Budgetary and Economic Effects of Repealing the Affordable Care Act, June I9, 20l5. CRS provided the statutory references. Notes: U.S.C. United States Code; ACA Patient Protection and Affordable Care Act (P.L. a. C30 and JCT explain this represents ?the outlay portion of several coverage-related provisions, including small- employer tax credits. and associated effects of coverage provisions on outlays for Social Security bene?ts.? b. CBC and JCT explain this re?ects ?repeal of fees on manufacturers and importers of branded drugs and on health insurance providers and repeal of an excise tax on manufacturers and importers of certain medical devices." The lack of the use of a comma is problem. Congressional Research Service Title IX of the ACA Title IX of the ACA includes a number of provisions that have been estimated to increase federal revenues.4 Table 4 lists each of these provisions. Based on estimates from a JCT publication released March 20, 2010, the provisions in Table 4 would increase federal revenues by $397.1 billion over the 2010?2019 period.5 Each of the provisions in Table 4 would be repealed if the ACA were repealed in its entirety, but HR. 3762 would repeal only two of the provisions (Table 4). Table 4. Revenue Provisions in Title IX of the ACA Repealed by HR. Provision Statute 3762? Excise Tax on High-Cost Employer-Sponsored Health 26 U.S.C. Sec. 4980! Yes Coverage Annual Fee on Health Insurance Providers Sec. 9010 of ACA No Medical Device Tax 26 U.S.C. Sec. 4191 Yes Annual Fee on Manufacturers and Importers of Sec. 9008 of ACA No Branded Drugs 10% Excise Tax on Indoor Tanning Services 26 U.S.C. Sec. 50003 No Eliminate Deductions for Expenses Allocable to 26 U.S.C. Sec. No Medicare Part subsidy Limit Deduction for Compensation to $500,000 for 26 U.S.C. Sec. I62 No Executives of Health Insurance Companies Medicare Payroll Tax 26 U.S.C. Sec. 3l0l No Medicare Contribution on Unearned Income 26 U.S.C. Sec. 3101 No Limit Health Flexible Spending Accounts (FSAs) to 26 U.S.C. Sec. I25 No $2,500 Raise Penalty for Non-Quali?ed Health Savings Account 26 U.S.C. Secs. 223. 220 No (HSA) Withdrawals from 10% to 20% Change the Definition of Medical Expenses for FSAs 26 U.S.C. Secs. 223, 220, 106 No and HSAs Raise 7.5% Floor for Itemized Medical Expenses to 10% 26 U.S.C. Sec. 213 No Source: CRS compiled the information from statute and HR. 3762. Notes: ACA Patient Protection and Affordable Care Act (P.L. 1 1-148); HR. 3762 The Restoring Americans' Healthcare Freedom Reconciliation Act, as passed by the House, and following enactment of the Bipartisan Budget Act of 20 5 (P.L. I 14?74); U.S.C. United States Code. For more details about the provisions listed in Table 4, see [Archived] CRS Report R41 128, Health-Related Revenue Provisions in the Patient Protection and Affordable Care Act (ACA). For questions about the report. contact the author of this memorandum. 4 It should be noted that these provisions are not the only ACA provisions that are estimated to affect federal revenues. 5 The JCT publication is JCX-17-10, published March 20, 2010. As far as CRS is aware, JCT has not issued publicly-available, updated estimates of all of these provisions since March 20, 2010. For more details about the estimates, see the JCT publication or [Archived] CRS Report CRS Report R41 128, Health-Related Revenue Provisions in the Patient Protection and A?ordable Care Act (ACA). For questions about the report, contact the author of this memorandum.