Republicans face many difficult decisions on the road to repealing and replacing the Affordable Care Act, but one of the toughest is what to do about the myriad taxes that help pay for the law’s provisions.
It’s tempting for GOP lawmakers to simply eliminate the taxes, which apply to wealthy people, the insurance and pharmaceutical industries and others, according to the Associated Press. But that leaves the thorny question of how to pay for an ACA replacement, which is sure to be costly.
Indeed, the Congressional Budget Office estimates that if the taxes are nixed, the federal government would lose out on $1.1 trillion in revenue over 10 years, the article notes.
Sen. Lamar Alexander, who is urging his GOP colleagues to move cautiously with how they handle the ACA, wants to see the taxes eliminated but is worried about what that might mean down the road, Politico reports.
“Most Republicans are going to be reluctant to reduce taxes now and then raise taxes later,” he said.
But if they repeal the ACA’s taxes, Republicans might have to do just that, according to the AP article. The other options are also politically fraught, such as cutting Medicare or Medicaid, or allowing federal deficits to rise.
The GOP does have the option of either phasing in repeals of taxes or only eliminating certain taxes, the AP points out. Most likely to be nixed are the taxes on medical device makers, and on insurance and pharmaceutical companies.
Indeed, insurance industry groups like America’s Health Insurance Plans have lobbied lawmakers to eliminate the health insurance tax (HIT), which already has been delayed by one year.
“The HIT is a direct sales tax on health insurance, which directly increases the premiums that people pay,” AHIP President and CEO Marilyn Tavenner wrote in a January blog post. “By addressing the HIT now, Congress and the new administration can immediately make healthcare more affordable for seniors and families.”