The fight over taxing health insurance

Delivered daily by 10 a.m., Pulse examines the latest news in health care politics and policy.

Jun 17, 2024 View in browser   By Ben Leonard and Chelsea Cirruzzo With Erin Schumaker  Driving The Day House Republicans are calling for raising taxes on employer health insurance plans. | Joe Raedle/Getty Images A FAMILIAR HEALTH TAX BATTLE — Leading employer groups and health insurers are bristling at proposals from prominent former Trump administration officials and House Republicans to increase taxes on some employer plans if Obamacare’s enhanced premium tax credits expire. The context: Premiums for employer insurance plans aren’t typically taxable, which incentivizes employers to offer more generous plans. The Paragon Health Institute, a conservative think tank led by former Trump policy adviser Brian Blase, has argued that Congress should allow the tax credits to expire after 2025, saying the Affordable Care Act didn’t intend to fully subsidize plans for enrollees. If that were to happen, Blase and Theo Merkel of Paragon recently argued, Congress should cap the tax exclusion at 125 percent of the average value of an employer plan as part of broader reform. They contend it would reduce wasteful spending by disincentivizing unnecessarily robust coverage and, in turn, allow employers to offer higher wages. “We think this is a modest way to ensure that people can still receive assistance for purchasing health insurance through their employer, but at the top end, rein in some of the excesses,” Merkel told Pulse. The Republican Study Committee — the largest House GOP caucus — endorsed capping the exclusion in a budget plan earlier this year. The proposals are familiar. John McCain called to end tax breaks on insurance in his 2008 presidential campaign, as did former House Speaker Paul Ryan in his Obamacare replacement bill in 2017. The backlash: Top insurer, employer and business groups and unions are urging Congressional leaders not to eliminate the tax breaks, saying it would imperil access and affordability. “Every time it’s proposed, it leads to extreme rejection,” James Gelfand, president of the ERISA Industry Committee, which represents the benefit interests of large employers, said, pointing to Congress overwhelmingly voting to overturn the “Cadillac tax” on pricey plans in 2019. “This is an existential threat to the employer-sponsored health insurance system.” Debate on trickledown impacts: Gelfand told Pulse it would lead to higher deductibles and premiums and more costs for employees. Merkel countered that the overwhelming majority of people wouldn’t see such increases, and those with increased deductibles would be those with very generous plans. Gelfand argued that, over time, the tax would impact more plans as costs decrease. Merkel said the proposal was crafted to avoid the issue that many had expected for the Cadillac tax. “It uses the value of the national average plan rather than a specified numerical amount indexed to a growth metric,” Merkel said. The outlook: Potential reforms would likely have to come in the next Congress. Merkel said that presidents of both parties have proposed reforms. “Economists across the political spectrum agree that the exclusion has a lot of inefficiency,” Blase said. Gelfand said he’s “confident” the plan can be defeated.  WELCOME TO MONDAY PULSE. I had the Orioles' “Warehouse Dog” at Camden Yards this weekend and would highly recommend it. Reach us and send us your tips, news and scoops at bleonard@politico.com or ccirruzzo@politico.com. Follow along @_BenLeonard_ and @ChelseaCirruzzo.   THE GOLD STANDARD OF HEALTHCARE POLICY REPORTING & INTELLIGENCE: POLITICO has more than 500 journalists delivering unrivaled reporting and illuminating the policy and regulatory landscape for those who need to know what’s next. Throughout the election and the legislative and regulatory pushes that will follow, POLITICO Pro is indispensable to those who need to make informed decisions fast. The Pro platform dives deeper into critical and quickly evolving sectors and industries, like healthcare, equipping policymakers and those who shape legislation and regulation with essential news and intelligence from the world’s best politics and policy journalists. Our newsroom is deeper, more experienced and better sourced than any other. Our healthcare reporting team—including Alice Miranda Ollstein, Megan Messerly and Robert King—is embedded with the market-moving legislative committees and agencies in Washington and across states, delivering unparalleled coverage of health policy and the healthcare industry. We bring subscribers inside the conversations that determine policy outcomes and the future of industries, providing insight that cannot be found anywhere else. Get the premier news and policy intelligence service, SUBSCRIBE TO POLITICO PRO TODAY.     AROUND THE AGENCIES Rep. Cathy McMorris Rodgers has outlined a plan to "build a stronger and more accountable NIH." | Francis Chung/POLITICO RETHINKING NIH — Republican committee chairs are calling for restructuring and reform at the National Institutes of Health, Erin reports. “It has been nearly two decades since Congress critically evaluated the NIH and advanced structural legislative reforms,” Reps. Cathy McMorris Rodgers (R-Wash.), chair of the House Committee on Energy and Commerce, and Robert Aderholt (R-Ala.), chair of the House Appropriations Labor-HHS-Education Subcommittee, wrote in a STAT opinion piece Friday. Republicans have historically championed the agency, they wrote, adding: “Given concerns raised during and after the Covid-19 pandemic and the need to maximize the impact of taxpayer money, it is imperative to build a stronger and more accountable NIH.” Rodgers, who earlier this year said she’s not seeking reelection, released a plan Friday outlining her vision for the agency, including: — A restructuring of NIH’s 27 institutes and centers into 15 groups, including splitting the National Institute of Allergy and Infectious Diseases in half — Term limits for institute and center leadership — Additional disclosure and transparency requirements — A congressionally mandated commission to review NIH’s performance, mission, objectives and programs By the numbers: With NIH operating on a tight budget after a funding slide from $47.5 billion in fiscal 2023 to $47.1 billion this year — a net cut of $378 million — NIH Director Monica Bertagnolli needs all the friends she can get in Congress. What’s next: Louisiana Sen. Bill Cassidy, the top Republican on the Senate committee that oversees the agency, released his own plan for NIH reform last month. The agency’s future is uncertain, especially if former president Donald Trump wins in November. While the Heritage Foundation, which has staffed conservative administrations for decades, doesn’t speak for the Trump campaign, the group has a presidential transition plan known as Project 2025 ready in case a conservative candidate wins. Among Project 2025’s plans for NIH: Limiting the power of agency officials by making it easier to fire them and beating back the diversity, equity and inclusion culture that the group says has infiltrated scientific research and is now embedded in the agency’s mission. WORKFORCE NURSE VISA FREEZE — No more nursing visas will be available for the rest of the fiscal year amid high demand, the State Department said this week, a development that health groups say could further undermine the sector’s workforce. It comes amid a nursing shortage after many left the health care workforce during the pandemic and as hospitals and health systems have increasingly leaned on international nurses to fill the void. The move comes amid high interest in the visa category that includes nurses. A similar situation played out last year. The annual limit will reset in October. “We’re reaching a dangerous inflection point where acute nurse staffing shortages feed burnout in a force-multiplying cycle that grows worse every day,” Patty Jeffrey, president of the American Association of International Healthcare Recruitment, said in a statement. The State Department can do little without Congress. Lawmakers haven’t changed the green card quotas for decades despite population growth. Dozens of healthcare groups, including the American Medical Association and the American Hospital Association, have backed legislation with broad bipartisan support in the House and the Senate that would speed up visa authorization for international nurses. It would also designate tens of thousands of more visas for healthcare workers temporarily. It’s not clear what the path forward is for the legislation, though. A State Department spokesperson said the agency “recognize[s] the importance of healthcare workers” and noted that the supply-demand issue is up to Congress to address. In Congress THE WEEK AHEAD — The House is out this week, but the Senate is in Washington with some health care hearings slated: — The Senate Homeland Security and Governmental Affairs Committee is meeting Tuesday to discuss Covid-19’s origins, “focusing on available evidence.” The hearing comes after Dr. Anthony Fauci testified earlier this month before a House panel that grilled him on Covid’s origins. — The Senate Finance Committee is meeting Tuesday to discuss Social Security disability benefits. Officials from the Social Security Administration, the Government Accountability Office and the Congressional Research Service will testify, as will the president of the Chicago Social Security Management Association. CBO’S HEP C ASK — The Congressional Budget Office is calling for research on the costs of treating hepatitis C and the effectiveness of testing and treatment efforts. Millions of people in the U.S. have the liver disease, which can be fatal or result in long-term health issues. Despite a highly effective antiviral treatment, many people don’t get the treatment, which can be prohibitively expensive.   SUBSCRIBE TO GLOBAL PLAYBOOK: Don’t miss out on POLITICO’s Global Playbook, our newsletter taking you inside pivotal discussions at the most influential gatherings in the world. Suzanne Lynch delivers the world's elite and influential moments directly to you. Stay in the global loop. SUBSCRIBE NOW.     Names in the News Zach Dembner is joining the White House as associate communications director for youth issues. He was previously senior adviser for communications at HHS. Stacy Dean is leaving her role as deputy undersecretary for the USDA’s Food, Nutrition, and Consumer Services. WHAT WE'RE READING POLITICO's Lauren Gardner reports that the CEO of Novo Nordisk will testify before the Senate HELP Committee on weight-loss drug prices in September after a subpoena vote threat. The Washington Post reports on patient safety issues at Amazon’s One Medical. An Amazon spokesperson said that the company is confident in its safety protocol.   Follow us on Twitter Dan Goldberg @dancgoldberg Chelsea Cirruzzo @chelseacirruzzo Lauren Gardner @Gardner_LM Sophie Gardner @sophie_gardnerj Kelly Hooper @kelhoops Robert King @rking_19 Ben Leonard @_BenLeonard_ David Lim @davidalim Megan Messerly @meganmesserly Alice Miranda Ollstein @aliceollstein Carmen Paun @carmenpaun Daniel Payne @_daniel_payne Ruth Reader @RuthReader Erin Schumaker @erinlschumaker   Follow us

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