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President Obama Vetoes Health Care Repeal Legislation

by Mike Godfrey, Tax-News.com, Washington

11 January 2016


On January 8, President Barack Obama vetoed the "reconciliation bill," which had been passed by the US Senate and House of Representatives and which would have undermined the Affordable Care Act (ACA), including the repeal of many of its tax measures.

Reconciliation bills raised in the House identify necessary budgetary savings. They can then be passed through the US Senate by a simple majority vote, rather than the usual 60-vote threshold.

The provisions of the ACA that would have been repealed in the Restoring Americans' Healthcare Freedom Reconciliation Act of 2015 included the requirement that most Americans should maintain "minimum essential" health insurance coverage, while employers are also encouraged to offer that health coverage. Those individuals and employers who do not comply with these mandates – the "employee mandate" and "employer mandate" – have to make "shared responsibility" payments, or tax penalties, to the Internal Revenue Service.

The Reconciliation Act would have eliminated the 2.3 percent medical device tax, which is imposed on manufacturers and importers of devices such as artificial hips, MRI scanners, and cardiac defibrillators. Within the bipartisan Protecting Americans from Tax Hikes (PATH) Act approved at the end of last year, Congress has already decided that this tax will not apply to sales during 2016 and 2017.

The Act would also have cancelled the Cadillac tax, a 40 percent tax to be imposed on the "excess benefit" of high-cost health insurance plans sponsored by employers. The PATH Act has postponed this tax until 2020.

Furthermore, the Act would have repealed the annual excise tax imposed on health insurance providers, known as the health insurance tax (the PATH Act has only suspended this tax for one year in 2017), as well as Obamacare's 3.8 percent surtax on investment income earned in households making at least USD250,000.

Following the reconciliation bill's first passage through the House in October last year, the former Chairman of the Ways and Means Committee's Health Subcommittee, and now Chairman of the Ways and Means Committee, Kevin Brady (R – Texas), said: "This bill dismantles the controversial and unpopular ACA, [and] repeals Democrat tax increases that force American jobs overseas and punish American workers who have good health care insurance."

On learning of the President's veto, House Speaker Paul Ryan (R – Wisconsin) stated: "We have shown now that there is a clear path to repealing Obamacare without 60 votes in the Senate. So, next year, if we're sending this bill to a Republican president, it will get signed into law."

TAGS: individuals | compliance | tax | tax compliance | law | insurance | insurance tax | excise duty | health care | legislation | United States | penalties | individual income tax | Healthcare | Healthcare | Tax

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