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Senate Republicans consider leaving tax on rich in health bill

WASHINGTON — Hoping to revive their bill to repeal the Affordable Care Act, Senate Republicans said Thursday they were seriously considering proposals to keep one of the law’s taxes on high-income people while providing more money to combat the opioid epidemic and new incentives for people to establish tax-free savings accounts for medical expenses.

In addition, Republicans said, they are considering a proposal that would allow insurers to sell cheaper, less comprehensive health plans if they also offered at least one plan that complies with consumer protection standards like those in the Affordable Care Act.

The open talk of leaving in place a tax on investment income was a big break from the House-passed health care bill and from the Senate’s initial approach. And it was championed by reliably conservative Republicans who acknowledged the tough choices that the health bill would force on lower-income Americans.

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“It’s not equitable to have a situation where you’re increasing the burden on lower-income citizens and lessening the burden on wealthy citizens,” said Senator Bob Corker, Republican of Tennessee. “That’s not a proposition that is sustainable, and I think leadership knows that.”

But the negotiations themselves are attracting controversy, and personal strains are showing. The Senate majority leader, Mitch McConnell of Kentucky, dressed down Senator Rob Portman, Republican of Ohio, this week over Medicaid cuts. Senate Republicans bristled after a super PAC tied to President Trump went after one of their own for opposing the bill, Dean Heller of Nevada. Adding to the insult, one of the top officials of that group, Nick Ayers, was named chief of staff of Vice President Mike Pence’s office on Thursday — after the blowup.

Democrats are also angry. For seven years, Republicans have denounced what they call corrupt deals made by Senate Democrats to buy votes for passage of former president Obama’s health care bill. The frantic wheeling and dealing among Republican senators on Thursday had more than a faint resemblance to the negotiations that led to adoption of the health care law in 2010.

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“The slush fund is open,” said Senator Ron Wyden of Oregon, the senior Democrat on the Finance Committee, referring to about $200 billion that could be available for deals in the Senate repeal bill. “Applicants can queue up and have a good chance of being treated favorably if they are from the right political party.”

McConnell was briefing senators Thursday about possible changes in the repeal bill, hoping for broad agreement by the end of the week so he can submit it to the Congressional Budget Office for an official assessment. He scrapped plans for a vote on the bill this week after he met broad resistance from Republican senators across the ideological spectrum.

This week, for the first time, Republicans are talking publicly about keeping a tax on capital gains and other investment income, imposed by the Affordable Care Act on individuals with annual incomes exceeding $200,000 and couples making more than $250,000.

McConnell’s bill would repeal that tax, like most other taxes in Obama’s health care law. The CBO said that repealing the investment tax, retroactive to the start of this year, would cost the government $172 billion in lost revenue from 2017 to 2026.

Corker and Senator John Cornyn of Texas, the No. 2 Republican, said party members were discussing the idea of keeping the investment tax.

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Conservative Senator Mike Lee of Utah took a swipe at “tax cuts for the affluent” in listing his concerns with the Senate bill.

And moderate Republican Senator Susan Collins of Maine said, “I do not see a justification for doing away with the 3.8 percent tax” on certain investment income. Collins said the investment tax differed from other taxes in the Affordable Care Act, like an excise tax on medical devices, because those taxes can increase costs for health care consumers.

“I distinguish between those tax increases that were part of Obamacare that increase premiums and the cost of health care versus those that don’t,” Collins said.

The Congressional Budget Office said McConnell’s bill could increase costs for low-income people to the point that “few low-income people would purchase any plan,” even with financial assistance available from the government.

Senate Republicans also said they were considering adding billions of dollars to the repeal bill to help pay for the prevention and treatment of opioid abuse. This provision is meant to woo wavering Republicans from states hard hit by the opioid epidemic, including Portman and Shelley Moore Capito of West Virginia.

It is not clear whether the additional funds would match the amount sought earlier by Portman and Capito: $45 billion over 10 years.

Senator Maggie Hassan, a Democrat who is from another state, New Hampshire, hit by the opioid crisis, said the additional money was “a drop in the bucket that would not come close to making up for the damage” that could be done by the bill’s cuts in Medicaid. The CBO said that over 10 years, McConnell’s bill would cut more than $770 billion from projected spending under Medicaid, a program that pays for a large share of substance abuse treatment and prevention costs in many states.

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Another proposal, championed by conservative Republican senators, would allow people to use money in health savings accounts to pay premiums for insurance policies, not just out-of-pocket expenses such as copayments and deductibles.