Senate Republicans announced Tuesday that their draft of the tax reform bill will repeal a key feature of Obamacare that penalizes consumers for choosing to go uninsured, in a move that could imperil the legislation by alienating centrists.
Tying repeal of the individual mandate to the tax reform bill furthers the conservative goal of dismantling Obamacare, while simultaneously aiding Republican efforts to redirect tax cuts toward the middle class.
The mandate repeal will save $300 billion in federal revenue while resulting in 13 million more uninsured Americans over the next decade, according to the Congressional Budget Office (CBO). While the individual mandate effectively amounts to a tax placed on consumers who don’t buy insurance, repealing the measure will increase revenue because fewer Americans will be coerced into applying for federal health care subsidies or Medicaid.
This additional federal revenue will be spent on increasing breaks for the middle class, Senate Finance Committee chairman Orrin Hatch said Tuesday.
Specifically, the Senate version will expand the child tax break from $1,600 per child to $2,000, and cut the three individual rates that apply to the middle class to 22 percent, 24 percent and 32 percent, according to the proposal, released by the Senate Finance Committee Tuesday night.
While the expansion of middle class tax cuts — gained through the individual mandate repeal — buoys the Republican argument that the bill is designed to benefit workers, some centrist Republicans fear that the measure might complicate the process of securing votes, a pressing concern considering the narrow 52-seat majority held by Republicans in the upper chamber.
GOP Sens. John McCain of Arizona, Susan Collins of Maine and Lisa Murkowski of Alaska all voted against the Republican Obamacare repeal attempt in July and have not committed to opposing the GOP tax reform bill due solely to the inclusion of the individual mandate repeal, but have expressed some trepidation.
“My concern is that if we combine the health-care issues with tax reform, we make it far more controversial,” Collins told reporters Tuesday.
“I want to see the whole package — it keeps changing as it goes through the House and Senate,” McCain said, stipulating that the measure was not a deal breaker. “I want the regular order.”
The more conservative wing of the GOP celebrated the inclusion of the individual mandate repeal.
GOP Rep. Mark Walker of North Carolina praised Senate Republicans, while deriding his colleagues in the House for not including an amendment he introduced that would have repealed the individual mandate.
“Adding the repeal of the individual mandate to tax reform could be the most consequential step this Congress takes to date in fulfilling our promises to the American people to both reform the tax code and repeal Obamacare,” Walker said in a statement. “It appears the Senate is keeping its promises. The House should do the same.”
GOP Sen. John Thune of South Dakota was optimistic about the bill’s chances Tuesday, telling reporters “It’s been whipped.”
House Speaker Paul Ryan and House Ways and Means Committee chairman Kevin Brady decided not to include individual mandate repeal in their version of the bill. Ryan said Tuesday that the House GOP leadership will wait and see if the Senate version passes with the measure before deciding whether to include it in their next draft.
“We didn’t want to complicate tax reform and make it harder than it otherwise would be,” Ryan said at a Fox News town hall meeting on taxes Tuesday evening.
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