Week ending June 16, 2017
H.R.2581 – Verify First Act
This bill is contingent on passage into law of the American Healthcare Act, the Republican replacement of the Affordable Care Act (ACA / Obamacare)
The bill concerns itself with tax credits proposed in the AHCA, HR 1628, to offset the cost of premiums for some individuals covered by health insurance.
Under the bill the Treasury can make tax credit payments to insurers in advance on behalf of those enrolled in a healthcare insurance plan but before Treasury can make those payments Treasury must have received confirmation from health and Human Services the person is a US citizen or an alien lawfully present in the US.
Under current law “A refundable tax credit (“premium assistance credit”) is provided for eligible individuals and families to subsidize the purchase of health insurance plans through an American Health Benefit Exchange referred to as “qualified health plans.” In general… advance payments with respect to the premium assistance credit are made during the year directly to the insurer. However, eligible individuals may choose to pay their total health insurance premiums without advance payments and claim the credit at the end of the taxable year.”
“The premium assistance credit is generally available for individuals (single or joint filers) with household incomes between 100 and 400 percent of the Federal poverty level” The individual then pays to the issuer of the plan the difference, if any, between the advance payment amount and the total premium charged for the plan.
Less than 200% of the poverty rate the subsidy is $600
At least 200% but less than 300% the subsidy is $1,500
At least 300% but less than 400% the subsidy is $2,550
If the advance payments of the premium assistance credit for a taxable year are less than the amount of the credit to which the individual is entitled, the additional credit amount is also reflected on the individual’s income tax return for the year.
“In the case of an individual whose eligibility for advance payments is delayed by reason of the requirement for verification under this bill if, for coverage to be effective as of the date requested in the individual’s application for enrollment, the individual would…be required to pay 2 or more months of retroactive premiums, the individual shall be provided the option to elect to postpone the effective date of coverage to the date that is not more than 1 month later than the date requested in the individual’s application for enrollment.”.”
The provision relating to the new premium assistance credit under the AHCA is contingent on the enactment of the AHCA and will apply (if at all) to months beginning after December 31, 2019.
(Full text of H.R. 2581 at congress.gov)
Sponsor: Rep. Barletta, Lou [R-PA-11] (Introduced 05/22/2017)
Status: Passed House /
VOTES and FLOOR ACTION
On Passage: On passage Passed by recorded vote: 238 – 184 (Roll no. 306).
Motion to recommit: On motion to recommit with instructions Failed by the Yeas and Nays: 193 – 231 (Roll no. 305).
Text of the motion:
The House proceeded with 10 minutes of debate on the Sanchez motion to recommit with instructions. The instructions contained in the motion seek to report the same back to the House forthwith with an amendment to add an exemption to the underlying bill for newborn children who are less than one year of age.
COST AND IMPACT
Cost to the taxpayers: Because the effects of the bill would be contingent upon enactment of subsequent legislation, the staff of the Joint Committee on Taxation estimates that the bill would in isolation have no effect on revenues or direct spending relative to current law.
Pay-as-you-go requirements: pay-as-you-go procedures do not apply
Regulatory and Other Impact: JCT has determined that the bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.
Dynamic Scoring: CBO and JCT estimate that enacting the bill without enacting the AHCA would not increase on-budget deficits or net direct spending by more than $5 billion in any of the four 10-year periods beginning in 2028
Tax Complexity: Pursuant to clause 3(h)(1) of rule XIII of the Rules of the House of Representatives, the staff of the Joint Committee on Taxation has determined that a complexity analysis is not required under section 4022(b) of the IRS Reform Act because the bill contains no provisions that amend the Internal Revenue Code of 1986 and that have “widespread applicability” to individuals or small businesses, within the meaning of the rule.
Earmark Certification: With respect to clause 9 of rule XXI of the Rules of the House of Representatives, the Committee has carefully reviewed the provisions of the bill and states that the provisions of the bill do not contain any congressional earmarks, limited tax benefits, or limited tariff benefits within the meaning of the
Duplication of programs: In compliance with Sec. 3(c)(5) of rule XIII of the Rules of the House of Representatives, the Committee states that no provision of the bill establishes or reauthorizes: (1) a program of the Federal Government known to be duplicative of another Federal program
Direct Rule-Making: In compliance with Sec. 3(i) of H. Res. 5 (115th Congress), the following statement is made concerning directed rule makings: The Committee advises that the bill requires no directed rule makings within the meaning of such section.
Advisory Committee Statement: Data not available
Budget Authority: In compliance with clause 3(c)(2) of rule XIII of the Rules of the House of Representatives, the Committee states that the bill involves no new or increased budget authority.
Constitutional Authority: Assumed.
VII. DISSENTING VIEWS
H.R. 2581 (Barletta, R-PA) amends H.R. 1628, the American Health Care Act (AHCA), to require individuals to complete identity authentication by providing a Social Security number (SSN) (and disallowing the use of an Individual Taxpayer Identification number (ITIN)) before receiving any advanceable tax credit established by the AHCA, as well as advanced premium tax credits (APTC) provided under current law, and on any tax return claiming health insurance premium tax credits. The Barletta bill amends AHCA, which has not passed the Senate or been enacted into law.
The Barletta bill fails to address the major, underlying flaws in the bill it amends. According to the nonpartisan, independent Congressional Budget Office (CBO), the AHCA would cause 23 million Americans to lose health insurance coverage, erode important consumer protections, and raise out-of-pocket health care costs for countless more Americans. H.R. 2581 does not address any of the problems that would undermine the health security for millions of working families.
Instead, the Barletta bill could exacerbate the ability to access affordable coverage that would be created by the AHCA for working families by increasing administrative barriers, requiring more government paperwork, and reducing access to affordable coverage. Ultimately, for someone who is ill, delayed care could mean the difference between accessing life-saving treatment and going without much needed care.
The Barletta bill fails to recognize unique circumstances of American families, forcing a one-size-fits-all approach to accessing financial help. Not all individuals who are eligible for tax credits have an SSN or are eligible to obtain an SSN that can be verified at the time of application. Some people, like newborns, may not have an SSN at the time their family applies on their behalf. Other individuals, like domestic
violence survivors and survivors of human trafficking, may have no need to have an SSN related to work and would experience delays in accessing health coverage as a result of this requirement.
Delays in the eligibility process would be significant because people must enroll during open enrollment or within a special enrollment period. People can enroll without premium tax credits (PTCs) but even one or two months of enrollment without PTCs could result in significant financial hardship.
For some people, like newborn babies, the delay in obtaining an SSN will be modest (on average, four weeks). Other groups may experience far longer delays if they must take steps like getting a work authorization prior to being able to obtain an SSN. In fact, the legislation itself acknowledges that this new bureaucratic barrier could cause delays in accessing credits of more than two months.
Under current law, initial verification of eligibility for APTCs occurs at the time an individual applies for coverage through the Marketplace. If an individual does not have an SSN, or if there is a problem verifying the SSN, a secondary verification process occurs. Under the law, the agency needs to notify the consumer of the problem verifying eligibility, and the applicant has 90 days to provide documentation or otherwise address the issues. During this verification process, individuals are presumed eligible to enroll in Marketplace coverage and, if appropriate, also provided financial assistance. If the individual is unable to provide documentation of eligibility, coverage and financial assistance is terminated. Under current law, individuals are not left in the position of needing coverage but having to wait potentially months to receive verification of eligibility for tax credits to afford that coverage.
This legislation would simply make it harder for individuals in need of financial assistance to purchase insurance coverage. Some people would forgo coverage due to the bureaucratic complications, and others would experience delays in accessing that coverage.
No evidence exists that says the current process isn’t working or ineligible individuals fraudulently are claiming the APTCs. Rep. Barletta claims that 500,000 undocumented immigrants received $750 million in premium tax credits. These claims are false and there is no evidence that supports these allegations.
As the source of information to support his claim, Rep. Barletta has pointed to a February 2016 majority staff report from the United States Senate Committee on Homeland Security and Governmental Affairs. However, this report does not make this claim, rather the report claims that “as of September 30, 2015, CMS awarded approximately $750 million in APTCs to individuals enrolled in FFMs who CMS later determined to be ineligible because the individuals failed to verify their citizenship, status as a national, or legal presence.”
The report does not make the leap that these individuals are undocumented immigrants, rather it focuses on their termination being linked to failure to verify their status. There is no evidence that suggests these individuals were undocumented immigrants–only that they never got around to providing the remaining documentation to keep coverage. This could have happened for any number of reasons, for example, they could have abandoned the process because of securing a job with coverage or moving out of state.
The number of people whose coverage was terminated for failure to provide necessary documentation continues to decline. Efforts have become more refined as the program matures, meaning fewer individuals are experiencing documentation problems, especially as electronic interfaces have improved.
Democrats offered two amendments to highlight serious shortcomings with H.R. 2581 and the continued issue that President Trump has not released his tax returns. Both amendments were ruled non-germane by Chairman Kevin Brady (R-TX) and appealed by Democratic Members. The appeals were then defeated by party-line votes. Congresswoman Sanchez (D-CA) offered an amendment to stop the provisions of H.R. 2581 from taking effect if the Inspector General of the Department of Health and Human Services determines that more than three percent (3%) of American citizens eligible for APTCs experience a disbursement delay. By having an impartial organization certify this threshold, the amendment would protect American citizens from suffering a delay in the disbursement of their APTCs as a result of this bill. Specifically, this amendment would protect the many APTC-eligible American citizens most likely to suffer the unintended consequences of this bill. Low-income American citizens, particularly naturalized Americans from immigrant families, have a more difficult time producing the documentation needed to verify their citizenship. These Americans are also more likely to have errors in their records because of the spelling of their surnames or the number of people who share the same name. This common sense fix would ensure that those who need coverage the most, including newborn children, will not have to wait for our system to “verify” their status.
Congressman Doggett (D-TX) offered an amendment to require President Trump to provide his tax returns under the Committee’s oversight authority. The Committee considered this matter previously. Congress, the Legislative Branch, has the responsibility and the authority to check the Executive Branch. As we have discussed, Section 6103 of the tax code allows for an examination of the President’s tax returns–authority put in place following the Teapot Dome scandal specifically so Congress could examine conflicts of interest in the Executive Branch. This is a genuine “Verify First” amendment. Before Congress assumes fraud and delays Americans’ access to health care, we need to verify first how much President Trump and his family would be enriched by changes made by the AHCA and how the many corporate entities over which he exercises control would be enriched. Moreover, we also need to know whether this is about personal enrichment of President Trump or if it is about the enrichment of our nation’s economy. We also should take this opportunity to verify that there is no other conflicts of interest as we move forward in legislation impacting the tax code.
For the reasons stated above, Democrats opposed this legislation as it imposes additional and unnecessary bureaucratic paperwork on working families that are in need of financial assistance to afford their health insurance premiums.
Richard E. Neal,
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