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GOP Is Said to Drop Insurance Executive Tax Change in Health Bill

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(Bloomberg) — Senate Republicans have dropped plans to change an Affordable Care Act health insurer executive compensation provision in their Better Care Reconciliation Act bill, according to a Republican aide familiar with the bill.

(Related: Individual Health Enrollment Drops 3%)

Senate Majority Leader Mitch McConnell has sent a revised version of the bill to the Congressional Budget Office for scoring.

An earlier version of the Affordable Care Act change bill would have scrapped the current Affordable Care Act health insurer executive compensation provision. The provision imposes a $500,000-per-year deduction limit on compensation for officers, employees and directors at health insurance providers.

The Affordable Care Act compensation deduction cap would be retained in the new version of the Better Care bill, said the aide, who requested anonymity. The change removes a politically awkward provision, although the effect on revenue would be relatively modest. Keeping the provision in place will generate only $505 million in tax revenue over 10 years, according to the Joint Committee on Taxation.

McConnell said that he plans to release the revised bill later this week and hold a key procedural vote early next week. But a number of Republican senators remain opposed to the measure. GOP leaders can only afford to lose two Republicans and still pass the measure, given Democrats’ united opposition.

The decision on the insurance executive tax provision comes as Republicans in the chamber are seeking to free up more funds to bolster health expenditures and gain more support for an Affordable Care Act change bill among GOP moderates.

On Tuesday, Republican senators said the new version will drop two other tax cuts on high earners. 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 JCT.

The U.S. House included the tax break for insurers in its version of the bill that passed in May.

Democrats have criticized the GOP proposal for benefiting the rich while causing poorer and sicker Americans to lose health coverage.

— Read IRS Drafts Health Insurer Exec Comp Regs on ThinkAdvisor.