(Bloomberg) — Senate Republican leaders dropped provisions that would repeal two taxes on high earners in a revised draft of the Better Care Reconciliation Act, their health care bill, that was sent to the Congressional Budget Office, according to GOP senators.
Republican leaders are now planning to retain the Affordable Care Act’s 3.8% tax on net investment income for people who earn more than $200,000 and couples with incomes over $250,000, as well as a 0.9% Medicare surtax on the same incomes.
Those two tax increases generate nearly $231 billion in revenue over a decade, according to the Joint Committee on Taxation. Leaving them in place could create a way to cover the costs of expanded Medicaid coverage for the poor or other programs demanded by holdout moderate Republicans.
“Obviously that’s a direction I think that a lot of our members want to move, to keep some of those in place and use the revenues to put into other places in the bill where it can make a difference,” John Thune of South Dakota, the No. 3 Senate Republican, said Tuesday. The decision to explore changes was first reported by the Wall Street Journal.
The reversal on tax cuts, aimed at winning over moderate holdouts, comes amid an announcement Tuesday by Senate Majority Leader Mitch McConnell that he is delaying a planned summer recess by two weeks, giving Republicans more time to pass a health care bill.
McConnell told reporters that he plans to release his revised bill on Thursday, with a new CBO estimate and an important procedural vote coming next week.
But Republican Lindsey Graham of South Carolina said Tuesday that he plans to release contours of an alternative health bill this week and that he is seeking the support of governors and senators of both parties.
“I want to do the best I can, and I think the best we can is not on the table right now,” Graham said.
A number of moderate Republicans had recoiled from the bill after the CBO estimated that 22 million fewer people would have insurance in a decade, and that premiums and deductibles for millions of low-income people would soar.
McConnell has been negotiating with his Republican colleagues over revisions after more than a half-dozen of them objected to a plan last month that combines tax cuts with deep reductions in health spending.
Although Republican leaders decided to retain two of the Affordable Care Act taxes, others would still be repealed in their revised bill.
“The taxes that will be repealed are all the taxes that have been driving up the cost of insurance,” said Sen. John Barrasso of Wyoming, the No. 4 Senate Republican.
Sen. Bill Cassidy, R-La. (Photo: Allison Bell/TA)