On September 15, 2021, House Democrats completed the enormous undertaking of translating President Biden’s economic agenda into a $3.5 trillion tax-and-spending proposal: the Build Back Better Act. The measure seeks to shepherd major changes to federal health care, education, immigration, climate, and tax laws, introducing a sprawling set of federal programs representing a range of Democratic priorities.
Thirteen committees approved legislation to be included in a reconciliation package that can be used to try and pass Democrats’ policies without Republican support. The FY 2022 budget resolution (S. Con. Res. 14) adopted in August gave the panels until September 15 to report legislation that would increase or decrease the deficit by specified amounts over 10 years.
On September 24, the House Budget Committee released draft text in advance of the panel’s September 25 markup of the social spending package. According to Budget Chair John Yarmuth (D-KY), the committee is holding the rare Saturday markup at the request of House Speaker Nancy Pelosi, who asked Yarmuth to move the procedural process along. The price tag and parameters of the package are still very much in flux as the House approaches critical deadlines next week.
This WSC Brief outlines the major health care and employer-related provisions included in the reconciliation package.
HEALTH CARE PROVISIONS
Drug Pricing
Create a “Fair Price Negotiation Program” for the Centers for Medicare and Medicaid Services to negotiate the price of 250 covered drugs and insulin. Prices couldn’t exceed 1.2 times the average price of the drug in six other countries. They would also be available to private insurance plans. Drugmakers that don’t negotiate successfully would face an excise tax of as much as 95%. Those that charge more than the negotiated maximum price would pay as much as ten times the difference in prices. The measure would also:
- Require drugmakers to repay the government their profits if they raise the price of a drug above inflation.
- Cap the cost of prescription drugs under Medicare Part D for beneficiaries.
- Block the drug rebate rule published under former President Donald Trump in November 2020.
Health Insurance Marketplace
American Rescue Plan Act (ARPA) Subsidies: Makes two of the three ARPA subsidy enhancements permanent and extend the third through 2025. Collectively, these changes expanded the availability of premium tax credits (PTCs) to millions more people by eliminating the ACA’s subsidy cliff at 400 percent of the federal poverty level (FP) and bolstering existing subsidies for those who already qualified. This would allow ARPA subsidies to continue to flow to:
- Higher-income people (whose income is above 400 percent FPL) who did not previously qualify for PTCs under the ACA (permanent);
- Lower-income people (whose income is between 100 and 400 percent FPL) who previously qualified for PTCs (permanent); and
- Individuals who receive unemployment benefits and would thus qualify for maximal marketplace subsidies (extended through 2025).
Reinsurance Program: Provides $10 billion annually for a fund to provide reinsurance payments to insurers operating in marketplace exchanges and assistance to individuals to reduce out-of-pocket costs.
- States would have to apply for these funds but would be automatically approved unless the Department of Health and Human Services (HHS) notifies the state otherwise. Approval would span five years total and could be revoked by HHS if a state failed to use the money as required.
- Non-Medicaid Expansion states would not be eligible for this federal funding for 2023 and 2024. Instead, HHS would operate the reinsurance program and have additional flexibility to adjust reinsurance parameters in those states as needed.
Family Glitch: Addresses the so-called “family glitch” (also known as the “employer firewall”) and revises the threshold to determine whether a taxpayer has access to affordable insurance through an employer-sponsored plan or a qualified small employer health reimbursement arrangement.
- Under the ACA, an employee’s job-based coverage is considered “affordable” if the employee contributes less than 9.5 percent of their household income towards premiums. This percentage has been adjusted each year and, for 2021, is 9.83 percent.
- This provision would better align the employee contribution with the enhanced subsidies by permanently reducing the employee contribution from 9.5 percent to
8.5 percent. The legislation would explicitly eliminate the indexing requirement (so the 8.5 percent requirement would not increase over time). This change would go into effect beginning with the 2022 plan year.
MAGI and Social Security Benefits: Amends the calculation of modified adjusted gross income for purposes of calculating PTC eligibility to exclude lump-sum Social Security benefits.
Medicare
Dental and Oral Health Care: Beginning Jan. 1, 2028, provides Part B coverage for the following:
- Preventive and screening dental and oral health services, which includes oral exams, dental cleanings, dental x-rays and fluoride;
- Basic treatments, which may include basic tooth restorations, basic periodontal services, tooth extractions and oral disease management services; and
- Major treatments, which may include major tooth restorations, major periodontal services, bridges, crowns and root canals.
Hearing Care: Beginning Oct. 1, 2023, provides Part B coverage for hearing aids for individuals with severe or profound hearing loss. Limits payments made for hearings aids to only once in a five-year period and only for hearing aid types that are not over the counter.
Vision Care: Beginning Oct. 1, 2022, provides coverage of routine eye exams, glasses and contact lenses.
Medicare Part D Benefit Redesign: Beginning in 2024, this bill caps the cost for prescription drugs by setting the annual out-of-pocket limit at $2,000. Reduces from 80% to 20% the government reinsurance in the catastrophic phase of Part D coverage, converting the current coverage gap discount program into a benefit-wide responsibility, requiring manufacturers of single source drugs to contribute to payments in both the initial (10%) and catastrophic phases (30%) of the benefit.
Medicaid/CHIP & Coverage Provisions
Reinsurance Program: Provides $10 billion annually for a fund to provide reinsurance payments to insurers operating in marketplace exchanges and assistance to individuals to reduce out-of-pocket costs.
Medicaid Gap: The measure would close the Medicaid coverage gap for lower-income individuals in states that didn’t expand the program under the Affordable Care Act by:
- Temporarily expanding the ACA’s premium tax credits to individuals below 100% of the federal poverty line and providing further cost-sharing subsidies.
- Creating a federal Medicaid program, operated by third-party entities, for nonexpansion states beginning in 2025 to cover those individuals.
Spousal Impoverishment: Permanently extends protections against spousal impoverishment for partners of Medicaid beneficiaries who qualify for long-term care and choose to receive home- and community-based services.
Money Follows the Person: Permanently extends the Medicaid Money Follows the Person Rebalancing Demonstration Program, which authorizes CMS to award state grants to assist Medicaid participants transition from long-term care to a home setting. Allocates $450 million in grant funding for each fiscal year following FY 2021. Allocates $500 million allotments for each three-year period beginning in FY 2022 for technical assistance and oversight to upgrade quality assurance and improvement systems.
Pregnant and Postpartum Women: Under ARPA, states were allowed the option to expand Medicaid/CHIP postpartum coverage from the initial 60 days to cover the 12month period following pregnancy. This provision requires state Medicaid programs to provide 12 months of full, continuous Medicaid/CHIP eligibility to postpartum women. Effective the first day of the first fiscal year quarter beginning at least one year following enactment.
Continuous Eligibility for Children: Builds upon the Medicaid disenrollment freeze implemented under the CARES Act to provide a full year of continuous Medicaid/CHIP coverage for children.
CHIP Extension: Makes the Children’s Health Insurance Program (CHIP) permanent and appropriate “such sums as are necessary” for it. It also would allow states to increase the income level needed for families to participate in CHIP and require states to provide one year of continuous eligibility for children enrolled in CHIP.
CHIP Eligibility: Provides states and territories with the option to increase CHIP income eligibility levels above the existing statutory ceiling, potentially increasing the number of eligible families for the program.
Medicaid Home and Community-Based Services
HCBS Improvement Planning Grants: Appropriates $130 million for FY 2022, to remain available until expended, for states to develop plans to expand access to home- and community-based services (HBCS) and strengthen the HCBS workforce. This includes $5 million for technical assistance and guidance to states. Sets a deadline of 12 months after the bill’s enactment for the Secretary to solicit state requests for and award grants to all states that meet the determined requirements.
HCBS Improvement Program: Provides states with a permanent 7 percentage point increase to the federal medical assistance percentage (FMAP) if the state implements an HCBS improvement program to strengthen and expand HCBS, and provides an enhanced FMAP of 80% for administrative costs associated with improving HCBS.
Provides a two-year increase to the FMAP of 2 percentage points if a state adopts an HCBS model that promotes self-direction of care and meets certain other requirements. Caps the FMAP at 95% in all cases.
Technical Assistance for HCBS: Appropriates $35 million for FY 2022, to remain available until extended, for HHS to prepare and submit a report to Congress within four years of the bill’s enactment on the implementation and outcomes of state HCBS improvement programs.
Maternal Mortality: Includes $830 million in new funding to address maternal mortality, including:
- $175 million in funding to award grants to address social determinants of maternal health for pregnant and postpartum individuals.
- $150 million in funding to award grants to accredited schools of nursing to grow and diversify the perinatal nursing workforce.
- $50 million in funding to award grants to establish or expand programs to grow and diversify the doula workforce.
- $75 million in funding to award grants to establish or expand programs to grow and diversify the maternal mental health and substance use disorder treatment workforce.
- $100 million in funding to award grants to address maternal mental health conditions and substance use disorders with respect to pregnant, lactating and postpartum individuals.
- $85 million in funding to award grants to support the development and integration of education and training programs for identifying and addressing risks associated with climate change for pregnant, lactating or postpartum individuals.
Medical Education
GME Residency Slots: Creates a new program that would fund 1,000 scholarships per year for medical students from rural and underserved communities if they agree to practice in those communities after graduating.
Scholarships: Funds 1,000 new residency slots per year, beginning in 2026, for medical schools that commit to providing cultural competency training, training in the community and increased mentorship for students.
Medical School Funding: Includes $1 billion in funding for medical school construction, expansion and training in underserved communities that lack quality access to quality health care.
VA GME: Provides 700 new health care residency positions at VA medical centers through FY 2029.
Teaching Health Center Grants
- $6 billion in funding for payments to teaching health centers that operate graduate medical education programs and the award of teaching health center development grants.
- $500 million in funding to award grants to qualified teaching health centers and to behavioral health care centers (including both substance abuse and mental health care facilities) to support the improvement, renovation, or infrastructure at such centers.
Nurse Education
- $1 billion in funding to support schools of nursing with program enhancement and infrastructure modernization, simultaneously increasing the number of nursing faculty and students, including rural and underserved areas.
- $300 million in funding for Nurse Corps, which provides loan repayment assistance to registered nurses (RNs) and advanced practice registered nurses (APRNs).
Other Grants
- $10 billion in funding to award grants for construction or modernization projects for purposes of increasing capacity and updating hospitals and other medical facilities to better serve communities in need. o Priority will be given to projects that will include public health preparedness, natural disaster emergency preparedness or cybersecurity against cyber threats.
- $10 billion in funding to award grants and enter into cooperative agreements for capital projects to community health centers.
- $7 billion in funding to support core public health infrastructure activities to strengthen the public health system through grants at the Centers for Disease Control and Prevention. o Qualifying activities include workforce capacity and competency; laboratory systems; all hazards public health and preparedness; testing capacity, including test platforms, mobile testing units and personnel;
health information, health information systems and health information analysis; disease surveillance; contact tracing; among other activities.
Pandemic Preparedness
- $5 billion in funding to support renovation, expansion and modernization of state and local public health laboratory infrastructure; renovating, expanding and modernizing laboratories of CDC; and enhancing the ability of CDC to monitor and exercise oversight over biosafety and biosecurity of state and local public health laboratories.
- $1.25 billion in funding to award grants to strengthen vaccine confidence; strengthen routinely recommended vaccine programs; and improve rates of vaccination.
- $500 million in funding to support public health data surveillance, aggregation and analytics infrastructure modernization initiatives; enhance reporting and workforce core competencies in informatics and digital health; and expand and maintain efforts to modernize the United States disease warning system.
- $8 billion in funding to the Assistant Secretary for Preparedness and Response, to prepare for, and respond to, public health emergencies, including shoring up the Strategic National Stockpile, strengthening our supply chains, supporting domestic and global manufacturing of vaccines, bolstering biosecurity and investing in therapeutics, among other activities.
OTHER RELEVANT PROVISIONS
Paid Leave: Provide up to 12 weeks of paid leave for eligible workers for the birth or adoption of a child, a personal health condition, caregiving for a family member, circumstances related to a family member’s deployment, and bereavement. Benefits would be administered by the Treasury Department and would begin in July 2023.
Advance Refunding Bonds: Restores a tax exemption for interest on advance refunding bonds, which was repealed by the 2017 tax overhaul (Pub. L. 115-97). State and local governments used those bonds to refinance their debt and access lower interest rates.
Retirement: Requires employers with more than five workers to automatically enroll new hires for retirement benefits. Employees could choose to opt out of the savings plan or modify contributions. Employers would be subject to an excise tax of $10 per day for each employee who isn’t covered by an automatic retirement plan.
TAX PROVISIONS
Tax Increases
The Ways & Means package includes sweeping tax changes to raise revenue for other portions of the package, including:
- Raising the top marginal personal income tax rate to 39.6%, from 37%, for individuals making more than $400,000 and joint filers making more than $450,000. A 3% surtax also would be imposed on individuals with adjusted gross incomes of more than $5 million.
- Increasing the capital gains tax rate to 25% from 20% for “certain high-income individuals.”
- Replacing the flat 21% corporate income tax rate with graduated rates: 18% on the first $400,000 of income, 21% on income up to $5 million, increasing to 26.5% for income after that.
- Generally requiring investment funds to hold assets for more than five years, rather than three years, for managers to get a preferential tax rate on their share of profits, known as carried interest.
- Reinstating a 16.4 cents-per-gallon tax on crude oil and imported petroleum products to fund Superfund cleanups of hazardous sites. It also would double the tax rate on sales of certain chemicals.
- Barring taxpayers from claiming losses on digital assets, such as cryptocurrencies.
- Increasing the current rate of excise taxes on cigarettes, small cigars, and rollyour-own tobacco, as well as on nicotine that’s been extracted, concentrated, or synthesized in tobacco products.
- Providing $78.9 billion in additional funding for the Internal Revenue Service to increase audits on wealthy individuals.
Tax Credits
Other tax provisions in the Ways & Means measure are designed to aid certain households and industries, such as:
- Extending an expanded version of the child tax credit through 2025 and making it permanently refundable.
- Making permanent expanded versions of the earned income tax credit for childless workers and the child and dependent care credit under the American Rescue Plan Act, Pub. L. 117-2.
- Making permanent the expanded availability under ARPA of the Affordable Care Act’s premium tax credits for health insurance purchased through the exchanges. It also would allow individuals who receive unemployment benefits to receive premium-free insurance plans through 2025.
- Creating a refundable income tax credit for union-made electric vehicles placed into service before Jan. 1, 2027, and extending several tax credits related to renewable energy production, including the production and investment credits.
Infrastructure and Community Development
The Ways & Means legislation includes several tax changes related to infrastructure financing and community development, such as:
- Allowing state and local governments that issue qualified infrastructure bonds to receive a tax credit for a portion of the interest they pay, similar to the Build
America Bonds under the 2009 American Recovery and Reinvestment Act (Pub. L. 111-5). The credit would be 35% of interest paid for bonds issued from 2022 through 2024, phasing down to 28% for bonds issued in 2027 and later years.
- Restoring a tax exemption for interest on advance refunding bonds, which was repealed by the 2017 tax overhaul (Pub. L.115-97). State and local governments used those bonds to refinance their debt and access lower interest rates.
- Establishing a 30% tax credit for state, local, and tribal governments to operate and maintain government-owned broadband systems.
- Making permanent and expanding the New Markets Tax Credit, offered to taxpayers that invest in lower-income communities.
- Establishing a 30% tax credit for individuals and businesses that participate in a qualified wildfire resilience program.
- Increasing state Low-Income Housing Tax Credit (LIHTC) allocations.
- Establishing a neighborhood homes credit for rehabilitating homes in certain lower-income areas.
WSC Report: House Democrats Finalize Reconciliation Package
Washington Strategic Consulting
September 24, 2021 1:10 pm
On September 15, 2021, House Democrats completed the enormous undertaking of translating President Biden’s economic agenda into a $3.5 trillion tax-and-spending proposal: the Build Back Better Act. The measure seeks to shepherd major changes to federal health care, education, immigration, climate, and tax laws, introducing a sprawling set of federal programs representing a range of Democratic priorities.
Thirteen committees approved legislation to be included in a reconciliation package that can be used to try and pass Democrats’ policies without Republican support. The FY 2022 budget resolution (S. Con. Res. 14) adopted in August gave the panels until September 15 to report legislation that would increase or decrease the deficit by specified amounts over 10 years.
On September 24, the House Budget Committee released draft text in advance of the panel’s September 25 markup of the social spending package. According to Budget Chair John Yarmuth (D-KY), the committee is holding the rare Saturday markup at the request of House Speaker Nancy Pelosi, who asked Yarmuth to move the procedural process along. The price tag and parameters of the package are still very much in flux as the House approaches critical deadlines next week.
This WSC Brief outlines the major health care and employer-related provisions included in the reconciliation package.
HEALTH CARE PROVISIONS
Drug Pricing
Create a “Fair Price Negotiation Program” for the Centers for Medicare and Medicaid Services to negotiate the price of 250 covered drugs and insulin. Prices couldn’t exceed 1.2 times the average price of the drug in six other countries. They would also be available to private insurance plans. Drugmakers that don’t negotiate successfully would face an excise tax of as much as 95%. Those that charge more than the negotiated maximum price would pay as much as ten times the difference in prices. The measure would also:
- Require drugmakers to repay the government their profits if they raise the price of a drug above inflation.
- Cap the cost of prescription drugs under Medicare Part D for beneficiaries.
- Block the drug rebate rule published under former President Donald Trump in November 2020.
Health Insurance Marketplace
American Rescue Plan Act (ARPA) Subsidies: Makes two of the three ARPA subsidy enhancements permanent and extend the third through 2025. Collectively, these changes expanded the availability of premium tax credits (PTCs) to millions more people by eliminating the ACA’s subsidy cliff at 400 percent of the federal poverty level (FP) and bolstering existing subsidies for those who already qualified. This would allow ARPA subsidies to continue to flow to:
- Higher-income people (whose income is above 400 percent FPL) who did not previously qualify for PTCs under the ACA (permanent);
- Lower-income people (whose income is between 100 and 400 percent FPL) who previously qualified for PTCs (permanent); and
- Individuals who receive unemployment benefits and would thus qualify for maximal marketplace subsidies (extended through 2025).
Reinsurance Program: Provides $10 billion annually for a fund to provide reinsurance payments to insurers operating in marketplace exchanges and assistance to individuals to reduce out-of-pocket costs.
- States would have to apply for these funds but would be automatically approved unless the Department of Health and Human Services (HHS) notifies the state otherwise. Approval would span five years total and could be revoked by HHS if a state failed to use the money as required.
- Non-Medicaid Expansion states would not be eligible for this federal funding for 2023 and 2024. Instead, HHS would operate the reinsurance program and have additional flexibility to adjust reinsurance parameters in those states as needed.
Family Glitch: Addresses the so-called “family glitch” (also known as the “employer firewall”) and revises the threshold to determine whether a taxpayer has access to affordable insurance through an employer-sponsored plan or a qualified small employer health reimbursement arrangement.
- Under the ACA, an employee’s job-based coverage is considered “affordable” if the employee contributes less than 9.5 percent of their household income towards premiums. This percentage has been adjusted each year and, for 2021, is 9.83 percent.
- This provision would better align the employee contribution with the enhanced subsidies by permanently reducing the employee contribution from 9.5 percent to
8.5 percent. The legislation would explicitly eliminate the indexing requirement (so the 8.5 percent requirement would not increase over time). This change would go into effect beginning with the 2022 plan year.
MAGI and Social Security Benefits: Amends the calculation of modified adjusted gross income for purposes of calculating PTC eligibility to exclude lump-sum Social Security benefits.
Medicare
Dental and Oral Health Care: Beginning Jan. 1, 2028, provides Part B coverage for the following:
- Preventive and screening dental and oral health services, which includes oral exams, dental cleanings, dental x-rays and fluoride;
- Basic treatments, which may include basic tooth restorations, basic periodontal services, tooth extractions and oral disease management services; and
- Major treatments, which may include major tooth restorations, major periodontal services, bridges, crowns and root canals.
Hearing Care: Beginning Oct. 1, 2023, provides Part B coverage for hearing aids for individuals with severe or profound hearing loss. Limits payments made for hearings aids to only once in a five-year period and only for hearing aid types that are not over the counter.
Vision Care: Beginning Oct. 1, 2022, provides coverage of routine eye exams, glasses and contact lenses.
Medicare Part D Benefit Redesign: Beginning in 2024, this bill caps the cost for prescription drugs by setting the annual out-of-pocket limit at $2,000. Reduces from 80% to 20% the government reinsurance in the catastrophic phase of Part D coverage, converting the current coverage gap discount program into a benefit-wide responsibility, requiring manufacturers of single source drugs to contribute to payments in both the initial (10%) and catastrophic phases (30%) of the benefit.
Medicaid/CHIP & Coverage Provisions
Reinsurance Program: Provides $10 billion annually for a fund to provide reinsurance payments to insurers operating in marketplace exchanges and assistance to individuals to reduce out-of-pocket costs.
Medicaid Gap: The measure would close the Medicaid coverage gap for lower-income individuals in states that didn’t expand the program under the Affordable Care Act by:
- Temporarily expanding the ACA’s premium tax credits to individuals below 100% of the federal poverty line and providing further cost-sharing subsidies.
- Creating a federal Medicaid program, operated by third-party entities, for nonexpansion states beginning in 2025 to cover those individuals.
Spousal Impoverishment: Permanently extends protections against spousal impoverishment for partners of Medicaid beneficiaries who qualify for long-term care and choose to receive home- and community-based services.
Money Follows the Person: Permanently extends the Medicaid Money Follows the Person Rebalancing Demonstration Program, which authorizes CMS to award state grants to assist Medicaid participants transition from long-term care to a home setting. Allocates $450 million in grant funding for each fiscal year following FY 2021. Allocates $500 million allotments for each three-year period beginning in FY 2022 for technical assistance and oversight to upgrade quality assurance and improvement systems.
Pregnant and Postpartum Women: Under ARPA, states were allowed the option to expand Medicaid/CHIP postpartum coverage from the initial 60 days to cover the 12month period following pregnancy. This provision requires state Medicaid programs to provide 12 months of full, continuous Medicaid/CHIP eligibility to postpartum women. Effective the first day of the first fiscal year quarter beginning at least one year following enactment.
Continuous Eligibility for Children: Builds upon the Medicaid disenrollment freeze implemented under the CARES Act to provide a full year of continuous Medicaid/CHIP coverage for children.
CHIP Extension: Makes the Children’s Health Insurance Program (CHIP) permanent and appropriate “such sums as are necessary” for it. It also would allow states to increase the income level needed for families to participate in CHIP and require states to provide one year of continuous eligibility for children enrolled in CHIP.
CHIP Eligibility: Provides states and territories with the option to increase CHIP income eligibility levels above the existing statutory ceiling, potentially increasing the number of eligible families for the program.
Medicaid Home and Community-Based Services
HCBS Improvement Planning Grants: Appropriates $130 million for FY 2022, to remain available until expended, for states to develop plans to expand access to home- and community-based services (HBCS) and strengthen the HCBS workforce. This includes $5 million for technical assistance and guidance to states. Sets a deadline of 12 months after the bill’s enactment for the Secretary to solicit state requests for and award grants to all states that meet the determined requirements.
HCBS Improvement Program: Provides states with a permanent 7 percentage point increase to the federal medical assistance percentage (FMAP) if the state implements an HCBS improvement program to strengthen and expand HCBS, and provides an enhanced FMAP of 80% for administrative costs associated with improving HCBS.
Provides a two-year increase to the FMAP of 2 percentage points if a state adopts an HCBS model that promotes self-direction of care and meets certain other requirements. Caps the FMAP at 95% in all cases.
Technical Assistance for HCBS: Appropriates $35 million for FY 2022, to remain available until extended, for HHS to prepare and submit a report to Congress within four years of the bill’s enactment on the implementation and outcomes of state HCBS improvement programs.
Maternal Mortality: Includes $830 million in new funding to address maternal mortality, including:
- $175 million in funding to award grants to address social determinants of maternal health for pregnant and postpartum individuals.
- $150 million in funding to award grants to accredited schools of nursing to grow and diversify the perinatal nursing workforce.
- $50 million in funding to award grants to establish or expand programs to grow and diversify the doula workforce.
- $75 million in funding to award grants to establish or expand programs to grow and diversify the maternal mental health and substance use disorder treatment workforce.
- $100 million in funding to award grants to address maternal mental health conditions and substance use disorders with respect to pregnant, lactating and postpartum individuals.
- $85 million in funding to award grants to support the development and integration of education and training programs for identifying and addressing risks associated with climate change for pregnant, lactating or postpartum individuals.
Medical Education
GME Residency Slots: Creates a new program that would fund 1,000 scholarships per year for medical students from rural and underserved communities if they agree to practice in those communities after graduating.
Scholarships: Funds 1,000 new residency slots per year, beginning in 2026, for medical schools that commit to providing cultural competency training, training in the community and increased mentorship for students.
Medical School Funding: Includes $1 billion in funding for medical school construction, expansion and training in underserved communities that lack quality access to quality health care.
VA GME: Provides 700 new health care residency positions at VA medical centers through FY 2029.
Teaching Health Center Grants
- $6 billion in funding for payments to teaching health centers that operate graduate medical education programs and the award of teaching health center development grants.
- $500 million in funding to award grants to qualified teaching health centers and to behavioral health care centers (including both substance abuse and mental health care facilities) to support the improvement, renovation, or infrastructure at such centers.
Nurse Education
- $1 billion in funding to support schools of nursing with program enhancement and infrastructure modernization, simultaneously increasing the number of nursing faculty and students, including rural and underserved areas.
- $300 million in funding for Nurse Corps, which provides loan repayment assistance to registered nurses (RNs) and advanced practice registered nurses (APRNs).
Other Grants
- $10 billion in funding to award grants for construction or modernization projects for purposes of increasing capacity and updating hospitals and other medical facilities to better serve communities in need. o Priority will be given to projects that will include public health preparedness, natural disaster emergency preparedness or cybersecurity against cyber threats.
- $10 billion in funding to award grants and enter into cooperative agreements for capital projects to community health centers.
- $7 billion in funding to support core public health infrastructure activities to strengthen the public health system through grants at the Centers for Disease Control and Prevention. o Qualifying activities include workforce capacity and competency; laboratory systems; all hazards public health and preparedness; testing capacity, including test platforms, mobile testing units and personnel;
health information, health information systems and health information analysis; disease surveillance; contact tracing; among other activities.
Pandemic Preparedness
- $5 billion in funding to support renovation, expansion and modernization of state and local public health laboratory infrastructure; renovating, expanding and modernizing laboratories of CDC; and enhancing the ability of CDC to monitor and exercise oversight over biosafety and biosecurity of state and local public health laboratories.
- $1.25 billion in funding to award grants to strengthen vaccine confidence; strengthen routinely recommended vaccine programs; and improve rates of vaccination.
- $500 million in funding to support public health data surveillance, aggregation and analytics infrastructure modernization initiatives; enhance reporting and workforce core competencies in informatics and digital health; and expand and maintain efforts to modernize the United States disease warning system.
- $8 billion in funding to the Assistant Secretary for Preparedness and Response, to prepare for, and respond to, public health emergencies, including shoring up the Strategic National Stockpile, strengthening our supply chains, supporting domestic and global manufacturing of vaccines, bolstering biosecurity and investing in therapeutics, among other activities.
OTHER RELEVANT PROVISIONS
Paid Leave: Provide up to 12 weeks of paid leave for eligible workers for the birth or adoption of a child, a personal health condition, caregiving for a family member, circumstances related to a family member’s deployment, and bereavement. Benefits would be administered by the Treasury Department and would begin in July 2023.
Advance Refunding Bonds: Restores a tax exemption for interest on advance refunding bonds, which was repealed by the 2017 tax overhaul (Pub. L. 115-97). State and local governments used those bonds to refinance their debt and access lower interest rates.
Retirement: Requires employers with more than five workers to automatically enroll new hires for retirement benefits. Employees could choose to opt out of the savings plan or modify contributions. Employers would be subject to an excise tax of $10 per day for each employee who isn’t covered by an automatic retirement plan.
TAX PROVISIONS
Tax Increases
The Ways & Means package includes sweeping tax changes to raise revenue for other portions of the package, including:
- Raising the top marginal personal income tax rate to 39.6%, from 37%, for individuals making more than $400,000 and joint filers making more than $450,000. A 3% surtax also would be imposed on individuals with adjusted gross incomes of more than $5 million.
- Increasing the capital gains tax rate to 25% from 20% for “certain high-income individuals.”
- Replacing the flat 21% corporate income tax rate with graduated rates: 18% on the first $400,000 of income, 21% on income up to $5 million, increasing to 26.5% for income after that.
- Generally requiring investment funds to hold assets for more than five years, rather than three years, for managers to get a preferential tax rate on their share of profits, known as carried interest.
- Reinstating a 16.4 cents-per-gallon tax on crude oil and imported petroleum products to fund Superfund cleanups of hazardous sites. It also would double the tax rate on sales of certain chemicals.
- Barring taxpayers from claiming losses on digital assets, such as cryptocurrencies.
- Increasing the current rate of excise taxes on cigarettes, small cigars, and rollyour-own tobacco, as well as on nicotine that’s been extracted, concentrated, or synthesized in tobacco products.
- Providing $78.9 billion in additional funding for the Internal Revenue Service to increase audits on wealthy individuals.
Tax Credits
Other tax provisions in the Ways & Means measure are designed to aid certain households and industries, such as:
- Extending an expanded version of the child tax credit through 2025 and making it permanently refundable.
- Making permanent expanded versions of the earned income tax credit for childless workers and the child and dependent care credit under the American Rescue Plan Act, Pub. L. 117-2.
- Making permanent the expanded availability under ARPA of the Affordable Care Act’s premium tax credits for health insurance purchased through the exchanges. It also would allow individuals who receive unemployment benefits to receive premium-free insurance plans through 2025.
- Creating a refundable income tax credit for union-made electric vehicles placed into service before Jan. 1, 2027, and extending several tax credits related to renewable energy production, including the production and investment credits.
Infrastructure and Community Development
The Ways & Means legislation includes several tax changes related to infrastructure financing and community development, such as:
- Allowing state and local governments that issue qualified infrastructure bonds to receive a tax credit for a portion of the interest they pay, similar to the Build
America Bonds under the 2009 American Recovery and Reinvestment Act (Pub. L. 111-5). The credit would be 35% of interest paid for bonds issued from 2022 through 2024, phasing down to 28% for bonds issued in 2027 and later years.
- Restoring a tax exemption for interest on advance refunding bonds, which was repealed by the 2017 tax overhaul (Pub. L.115-97). State and local governments used those bonds to refinance their debt and access lower interest rates.
- Establishing a 30% tax credit for state, local, and tribal governments to operate and maintain government-owned broadband systems.
- Making permanent and expanding the New Markets Tax Credit, offered to taxpayers that invest in lower-income communities.
- Establishing a 30% tax credit for individuals and businesses that participate in a qualified wildfire resilience program.
- Increasing state Low-Income Housing Tax Credit (LIHTC) allocations.
- Establishing a neighborhood homes credit for rehabilitating homes in certain lower-income areas.