Congress to permanently repeal 3 major health taxes in year-end spending deal

Congressional leaders struggled over the weekend to wrap up the remaining disputes over what would be included in the nearly $1.4 trillion fiscal 2020 spending text and which policy bills would ride to enactment along with the appropriations measures. While leaders are still racing to finalize a deal, top appropriators are said to be on track to release the text of the final fiscal 2020 funding bills by midday, setting up passage in both the House and Senate this week.

The repeal of the three taxes represents an expensive windfall victory for the health care industry, which lobbied intensely against all three taxes since they were first mandated by the Affordable Care Act.

The medical device tax and health insurance tax have been intermittently implemented, while Congress preserved a moratorium on the “Cadillac” tax until 2022. The House voted overwhelmingly over the summer to drop it completely, and last week, Senate Minority Leader Chuck Schumer first pushed for a full repeal as part of the spending deal.

The move all but guts the funding provisions for the Affordable Care Act, with the Cadillac tax repeal alone projected to cost nearly $200 billion. An outdated 2015 estimate from the Congressional Budget Office said a medical device tax repeal would cost about $24 billion over a decade, while the IRS estimated earlier this year that a repeal of the health insurance tax would amount to $15.5 billion just in 2020.

The spending package contains other prominent health provisions, including:

— Two years of Medicaid funding for Puerto Rico and other U.S. territories, providing a financial reprieve for localities that had been relying on temporary funding extensions. The funding agreement is two years shorter than what leaders of the Senate Finance Committee recently proposed as well as legislation that the House Energy and Commerce Committee approved this summer. Both of those bills would have provided Medicaid funds for four years.

— To help pay for the package, lawmakers plan to wrap in language that would make it easier for generic drug companies to obtain samples of brand-name drugs needed to develop lower-cost competing products. The so-called CREATES Act also makes it easier for generic products to come to market when the brand-name drug is subject to a special FDA-mandated safety program known as REMS. It is projected to save nearly $4 billion over a decade.

— A rider in the package would bar HHS from ending auto-reenrollment in the Obamacare exchanges and prevent the Trump administration from banning a practice called “silver-loading,” a strategy to minimize fallout from President Donald Trump’s elimination of a key Obamacare subsidy, according to a senior House Democratic aide.

House Democrats plan to split all 12 fiscal 2020 spending bills into two packages for floor consideration on Tuesday, with the Defense, Homeland Security, Commerce-Justice-Science and Financial Services measures included in the first bundle, a Democratic aide confirmed to POLITICO.

The remaining eight measures will comprise the second “minibus,” including: Agriculture-FDA, Labor-HHS-Education, Energy-Water, Interior-Environment, State-Foreign Operations, Transportation-HUD, Military Construction-VA and Legislative Branch.

The Senate is then expected to clear the measures for Trump’s signature before government funding expires at midnight Friday.

Heather Caygle, Jennifer Scholtes, Adam Cancryn, Rachana Pradhan, Sarah Karlin-Smith and Rachel Roubein contributed to this report.