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From Health Law Daily, December 16, 2015

$1.1T shutdown-avoiding bill has major health reform implications

By Melissa Mitchell, J.D.

A $1.1 trillion appropriations bill has been released and is set to be voted on by Congress within the week. The legislation, which would avoid a government shutdown and fund the federal government through September 2016, will postpone the implementation of two major provisions of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148)—the medical device tax and the so-called Cadillac tax—for two years. The 2,000 plus page bill also contains other notable appropriation measures for Medicare, Medicaid, and other federal health programs.

Health reform implications. Section 9001 of the ACA places an excise tax, known as the Cadillac tax, on high-cost employer-sponsored plans. Section 9009 of the ACA places a 2.3 percent excise tax on the sale of certain medical devices. Both of these provisions have been in the crossfires of the Republican-backed bills that attempt to, at least in part, repeal the ACA (see House to vote on repeal of major ACA provisions, October 28, 2015; Senate passes bill dismantling Affordable Care Act, December 9, 2015). The proposed appropriations bill would push back the enactment of both of these excise taxes for two years, also effectively pushing back the responsibility of dealing with the implementation of these provisions to a new Administration.

Other health implications. In addition to general funding of Medicare, Medicaid, and other federal health care programs, the appropriations bill also extends funding into new areas including: (1) Medicare payments for digital radiography, (2) Medicaid payments for durable medical equipment (DME), (3) Medicare payments for disposable devices, and (4) Medicare payments for hospitals in Puerto Rico.

Political underpinnings. Thus far, the bill has been characterized as a compromise and trade-off between the wish lists of the Republican and Democratic legislators. The Hill reported that the spokeswoman for Speaker Paul Ryan (R-Wis) told other Republicans, “While not getting everything we wanted, the Speaker noted that both packages include many provisions that Republicans have long fought for.” Further, several policy riders are included in the legislation to appease particular groups in order to garner support for the entire bill. For instance, the Cadillac tax postponement is meant to appease labor unions specifically, while American energy producers are expected to support the lifting on the 40-year ban on crude oil exports.

While the White House has indicated that it is opposed to the postponement, the Hill reported yesterday that “officials have signaled that President Obama would not veto the package over a two-year delay.” Other tax breaks that were “key pieces of Obama’s 2009 stimulus,” including extensions of the Earned Income Tax Credit and American Opportunity Tax Credit for college tuition, are also built into the potential postponement.

Next steps. After last-minute negotiations late into the night, the bill was unveiled early in the morning on December 16. While initial reports indicated that voting could take place as early as the same day, this was based on the idea that the bill would have been ready earlier. It is now expected that voting will not occur until, at the earliest, December 18.

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