On Wednesday, December 20, Congress passed the Tax Cuts and Jobs Act (H.R. 1). As we have reported, the sweeping tax overhaul legislation triggers mandatory across-the-board cuts to government programs, including Medicare, in order to offset the nearly $1.5 trillion increase to the deficit caused by the bill. Without an override of the Senate’s pay-as-you-go, or PAYGO, rule, the bill would have forced an additional 4% sequestration cut to Medicare—estimated at about $25 billion per year for the next decade. ASCRS and the medical community opposed these additional cuts, which are on top of the current 2% Medicare sequester, and lobbied for the waiver. As a result of these efforts, on Thursday, Congress voted to waive PAYGO in a short-term spending bill to fund the government until January 19, thus temporarily delaying the sequestration through 2018.
One provision of note in the tax bill will exempt certain doctors, nurses, and veterinarians from a 21% excise tax on non-profit income. According to the legislation, the five highest-earning executives in tax-exempt organizations, including hospitals, whose annual revenues exceed $1 million would be subject to the tax, but it exempts those executives who are also clinicians from taxes on any income generated from providing medical services.
H.R. 1 also repeals the Affordable Healthcare Act’s (ACA) individual mandate, which penalizes individuals who fail to purchase health insurance and was a key provision of the law. Along with the Medicare sequester, individual mandate repeal will be delayed until 2019.
Key Republicans said they would wait until 2018 to introduce short-term market stabilization legislation to fund the ACA’s cost-sharing reduction (CSR) payments and reinsurance. Senate Health, Education, Labor, and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN) and Sen. Susan Collins (R-ME), both of whom have co-authored market stabilization bills, said in a statement, “Rather than considering a broad year-end funding agreement as we expected, it has become clear that Congress will only be able to pass another short-term extension.” Both agreed that their legislation could wait until January.
President Trump signed the tax bill into law earlier today.