When the first session of the 115th Congress adjourned at the end of 2017, majority leadership opted to devote all available time and resources to enacting a comprehensive tax overhaul and providing temporary patches on critical issues. This course of action means that as the second session of the 115th Congress convenes, lawmakers are working to resolve a number of timely high-profile items that dominated last year’s legislative agenda.
Congress enacted a 6-month extension of funding for the Children’s Health Insurance Program (CHIP) along with temporary investments in other healthcare programs. Legislators will need to advance a more comprehensive solution before temporary funding runs out at the end of March 2018. On a related note, Congress has yet to advance an anticipated “tax-extenders” package to further delay or eliminate a host of taxes. In this regard, the medical device tax and other healthcare-related taxes took effect on January 1, 2018, and will need to be retroactively alleviated in any subsequent legislation.
Initially, legislation to stabilize health insurance markets was wrapped up in the ongoing discussion on pending healthcare items after Senator Susan Collins (R-ME) insisted that the Senate consider the Alexander-Murray bill to restore cost-sharing subsidies and the Collins-Nelson bill to bolster reinsurance. Senator Collins has backed away from these demands though and is now simply stating a hope that market stabilization efforts can be enacted before 2019. Her position now seems to de-couple the aforementioned bills from the ongoing efforts to address timely healthcare items.
Congress also passed another short-term Continuing Resolution (CR) to provide temporary funding at Fiscal Year (FY) 2017 levels for federal programs until January 19, 2018. Presently, the FY 2018 appropriations process includes additional guidance for the Centers for Medicare and Medicaid Services (CMS) on promoting quality care in electrodiagnostic medicine as well as meaningful funding increases for medical research programs. At issue is an ongoing debate between both chambers and both parties over the size of budget increases for defense and non-defense discretionary programs.
In closing, it is important to note that the enacted tax overhaul legislation is a mixed-bag for healthcare. The legislation includes a repeal of the individual mandate to purchase insurance that will potentially disrupt insurance markets in 2019, halves the benefit of the Orphan Drug Tax Credit (instead of eliminating it as proposed by the House) which may undermine rare disease treatment development, and increases the generosity of the medical expense deduction. For academic institutions, the final bill dropped early proposals to eliminate student loan interest deductions and to tax tuition waivers for graduate students while also including a new 1.4% tax of endowments that currently applies to about 40 schools.