Committee for a Responsible Federal Budget
taxes

JCT: ACA Repeal Will Cut Taxes by At Least $600 Billion

Mar 7, 2017 | Health Care| Taxes

In light of the House GOP releasing their bill to repeal and replace the Affordable Care Act (ACA or "Obamacare"), the Joint Committee on Taxation (JCT) today released their estimates (additional estimates in the table footnote) of the costs of repealing the ACA's taxes. JCT estimates repealing the ACA's taxes alone will cost nearly $600 billion through 2026 – and likely close to $700 billion through 2027.

Importantly, these estimates do not include the cost of repealing the individual and employer mandates or the cost of the replacement tax credits in the House legislation – though they do include the cost of the legislation's proposed Health Savings Account (HSA) expansions. These estimates are only for the individual tax measures repealed by the House bill.

Provision 2017-2026 Cost
Repeal 3.8% investment income tax $158 billion
Repeal health insurer tax $145 billion
Repeal 0.9% HI surtax $117 billion
Delay Cadillac tax from 2020 to 2025 $49 billion
Repeal increase in medical expense deduction floor $35 billion
Repeal prescription drug tax $25 billion
Repeal 2.3% medical device tax $20 billion
Repeal limit on flexible spending accounts $19 billion
Repeal other taxes $8 billion
Subtotal, Repeal/Delay ACA Taxes $575 billion
Expand Health Savings Accounts $19 billion
Total $594 billion

Source: Joint Committee on Taxation (1, 2, 3, 4, 5).

Without further information, it is impossible to know if these tax cuts will be fully paid for as part of the House plan, though it is clear that the inclusion of these tax cuts will leave less revenue available to finance any coverage provisions. It also seems clear that the legislation will worsen the financial state of the Medicare Hospital Insurance trust fund.

We hope that policymakers will work to ensure their final repeal and replace legislation is fully offset, improves Medicare solvency, slows the growth of health care spending, and helps put the debt on a fiscally responsible trajectory.

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