Potential Policy Implications of the House
Reconciliation Bill (H.R. 3762)
Annie L. Mach, Coordinator
Analyst in Health Care Financing
Elayne J. Heisler
Specialist in Health Services
Sarah A. Lister
Specialist in Public Health and Epidemiology
Sean Lowry
Analyst in Public Finance
C. Stephen Redhead
Specialist in Health Policy
James V. Saturno
Specialist on Congress and the Legislative Process
Julie M. Whittaker
Specialist in Income Security
November 13, 2015
Congressional Research Service
7-5700
www.crs.gov
R44238

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Potential Policy Implications of the House Reconciliation Bill (H.R. 3762)

Summary
The FY2016 budget resolution (S.Con.Res. 11) established the congressional budget for the
federal government for FY2016 and set forth budgetary levels for FY2017-FY2025. It also
included reconciliation instructions for House and Senate committees to submit changes in laws
to reduce the federal deficit to their respective budget committees.
On October 23, 2015, the House passed H.R. 3762, a reconciliation bill containing provisions
submitted by three committees—Ways and Means, Energy and Commerce, and Education and the
Workforce—pursuant to the reconciliation instructions included in the FY2016 budget resolution.
The House reconciliation bill—H.R. 3762, the Restoring Americans’ Healthcare Freedom
Reconciliation Act of 2015—would repeal several provisions of the Patient Protection and
Affordable Care Act (ACA; P.L. 111-148, as amended). These provisions are as follows:
 the individual mandate;
 the employer mandate;
 the excise tax on high-cost employer-sponsored coverage (the Cadillac tax);
 the medical device tax;
 the auto-enrollment requirement for large employers; and
 the Prevention and Public Health Fund (PPHF).
Additionally, H.R. 3762 could restrict federal funding for the Planned Parenthood Federation of
America (PPFA) and its affiliates and clinics for a period of one year. The bill also would
appropriate an additional $235 million for each of FY2016 and FY2017 to the federal health
centers program.
The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) estimate
that the House reconciliation bill would reduce federal deficits by $78.1 billion over the 2016-
2025 period.
This report provides background on the reconciliation process and summarizes the provisions in
H.R. 3762, including their projected budgetary impact. It then briefly examines some of the bill’s
policy implications. The report will be updated as necessary to reflect key legislative
developments.
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Potential Policy Implications of the House Reconciliation Bill (H.R. 3762)

Contents
Introduction ..................................................................................................................................... 1
Background on the Reconciliation Process ..................................................................................... 1
Reconciliation Instructions and Committee Action................................................................... 1
FY2016 Budget Resolution ............................................................................................................. 2
House Reconciliation Bill................................................................................................................ 3
Policy Implications of Repeal ......................................................................................................... 5
Individual Mandate ................................................................................................................... 5
Employer Mandate .................................................................................................................... 6
Excise Tax on High-Cost Employer-Sponsored Coverage ....................................................... 7
Medical Device Tax .................................................................................................................. 7
Auto-enrollment Requirement................................................................................................... 8
Prevention and Public Health Fund ........................................................................................... 8
Federal Funding for Planned Parenthood and Health Centers ........................................................ 9

Tables
Table 1. ACA Provisions That Would Be Repealed by the House Reconciliation Bill, H.R.
3762 .............................................................................................................................................. 3

Contacts
Author Contact Information ........................................................................................................... 11
Key Policy Staff ............................................................................................................................. 11

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Potential Policy Implications of the House Reconciliation Bill (H.R. 3762)

Introduction
On October 23, 2015, the House passed a reconciliation bill containing provisions submitted by
three committees—Ways and Means, Energy and Commerce, and Education and the Workforce—
pursuant to reconciliation instructions included in the FY2016 budget resolution (S.Con.Res. 11).
The bill, the Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015 (H.R. 3762),
would repeal several provisions of the Patient Protection and Affordable Care Act (ACA; P.L.
111-148, as amended). It would also restrict federal funding for the Planned Parenthood
Federation of America (PPFA) and its affiliates and clinics for a period of one year.
This report provides background on the reconciliation process and summarizes the provisions in
H.R. 3762, including their projected budgetary impact. It then briefly examines the bill’s policy
implications. The report will be updated as necessary to reflect key legislative developments.
Background on the Reconciliation Process
Budget reconciliation is an optional, expedited legislative process that consists of several stages,
beginning with the adoption of the budget resolution. As provided in Section 310 of the
Congressional Budget Act of 1974 (P.L. 93-344, as amended; referred to below as the Budget
Act), the purpose of the reconciliation process is to allow Congress to use an expedited procedure
when considering legislation that would bring existing spending, revenue, and debt-limit laws
into compliance with current fiscal priorities established in the annual budget resolution.
In adopting a budget resolution, Congress is agreeing upon budgetary goals for the upcoming
fiscal year (as well as for a period of at least four additional out-years). In some cases, to achieve
these goals, Congress must enact legislation that alters current revenue, direct spending, or debt-
limit laws. In these situations, Congress seeks to reconcile existing law with current priorities.
Since the first use of the reconciliation process in 1980, this expedited procedure has been used to
pass 23 reconciliation bills.1
Reconciliation Instructions and Committee Action
If Congress intends to use the reconciliation process, reconciliation directives (also referred to as
reconciliation instructions) must be included in the annual budget resolution. These directives
trigger the second stage of the process by instructing individual committees to develop and report
legislation that would change laws within their respective jurisdictions related to direct spending,
revenue, or the debt limit.
When a committee is instructed to submit legislation reducing the deficit by a specific amount,
that amount is considered a minimum, meaning a committee may report greater net savings.
Although there is no procedural mechanism to ensure that legislation submitted by a committee in
response to reconciliation instructions will be in compliance with the instructed levels, if a
committee does not report legislation—or if such legislation is not in compliance with the
reconciliation instructions—procedures are available that would allow either chamber to move
forward with reconciliation legislation. In either situation, legislative language that falls within
the noncompliant committee’s jurisdiction can be added to a reconciliation bill during floor

1 For a list of all reconciliation bills, see CRS Report R40480, Budget Reconciliation Measures Enacted Into Law:
1980-2010, by Megan S. Lynch.
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Potential Policy Implications of the House Reconciliation Bill (H.R. 3762)

consideration that would bring the bill into compliance with its reconciliation instructions. These
methods vary by chamber.
In developing legislation in response to reconciliation instructions, the policy choices made
remain the prerogative of the committee. In some instances, reconciliation directives have been
couched in terms of particular options or assumptions regarding how an instructed committee
might be expected to achieve its reconciliation target, but such language has not been considered
binding on committees and would not be enforceable through points of order.
Once a specified committee develops legislation, the reconciliation directive may further direct
the committee to report the legislation for consideration in the respective chamber or to submit
the legislation to the Budget Committee to be included in an omnibus reconciliation measure.
Under Section 310(b)(2) of the Budget Act, the Budget Committee is required to mark up and
report such omnibus legislation “without any substantive revision.” Reported reconciliation
legislation is eligible to be considered under expedited procedures in both the House and the
Senate. As with all legislation, any differences in the reconciliation legislation passed by the two
chambers must be resolved before the bill can be sent to the President for approval or veto.
Although reconciliation instructions may include target dates,2 there is no requirement that the
Budget Committee—in either chamber—wait for all committees to submit legislative language.
Nor is there a requirement for the Budget Committee to report an omnibus reconciliation bill on a
specific date. The late response of one or more committees would not cause the bill to lose its
privileged status as a reconciliation bill. In the case of omnibus reconciliation measures, the
House and Senate Budget Committees have at times delayed reporting a bill. As a consequence,
the target date included in reconciliation instructions is not necessarily indicative of a timetable
for consideration of reconciliation legislation.3
FY2016 Budget Resolution
S.Con.Res. 11 established the congressional budget for the federal government for FY2016 and
set forth budgetary levels for FY2017-FY2025. It also included reconciliation instructions for
House and Senate committees to submit changes in laws to reduce the federal deficit to their
respective budget committees.
Section 2001(a) of S.Con.Res. 11 instructed two committees of the Senate—the Committee on
Finance and the Committee on Health, Education, Labor, and Pensions—to submit changes in
laws within each committee’s jurisdiction to reduce the deficit by not less than $1 billion for the
period FY2016-FY2025.
Section 2002(a) instructed three committees of the House—the Committees on Education and the
Workforce, Energy and Commerce, and Ways and Means—to submit changes in laws within each
committee’s jurisdiction to reduce the deficit by not less than $1 billion for the period FY2016-
FY2025.
Section 2002(b)(2) further provided that these committees shall “note the policies discussed in
title VI [of S.Con.Res. 11] that repeal the Affordable Care Act and the health care related

2 For example, the FY2016 budget resolution (S.Con.Res. 11) included a target date of July 24, 2015, for the instructed
committees to submit legislative language to the Budget Committee in their respective chambers.
3 For more on reconciliation instructions, see CRS Report R41186, Reconciliation Directives: Components and
Enforcement, by Megan S. Lynch.
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provisions of the Health Care and Education Reconciliation Act of 2010” and “determine the
most effective methods” by which they “shall be repealed in their entirety.”
On October 9, 2015, the House Budget Committee held a markup and voted to report a
reconciliation bill, the Restoring Americans’ Healthcare Freedom Reconciliation Act, combining
the submissions of the three committees (H.R. 3762, H.Rept. 114-293). The House Rules
Committee subsequently reported a resolution on October 21, setting the terms for consideration
of H.R. 3762 (H.Res. 483, H.Rept. 114-303). In addition to allowing two hours of general debate
on the bill, the resolution provided that the vote to approve the terms for consideration of the bill
would also amend the language in the bill concerning grants to Planned Parenthood, and striking
the language concerning the Independent Payment Advisory Board (IPAB).4 H.Res. 483 was
approved by the House, 240-187, on October 22, and H.R. 3762, as amended, was considered and
passed the following day, 240-189. As of the date of this report, the Senate has not taken any
public action related to the reconciliation instructions in S.Con.Res. 11.
House Reconciliation Bill
Table 1 summarizes the ACA provisions that would be repealed by H.R. 3762, the House
reconciliation bill. The table also shows the impact that repealing these ACA provisions would
have on the federal deficit, excluding any macroeconomic effects, as estimated by the
Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT). According to
CBO and JCT, the House reconciliation bill would reduce federal deficits by $78.1 billion over
the 2016-2025 period, excluding any macroeconomic effects.5
Some of the policy implications of repealing these provisions are discussed in the final section of
this report. (See “Policy Implications of Repeal”)
Table 1. ACA Provisions That Would Be Repealed by the House Reconciliation
Bill, H.R. 3762
(includes CBO/JCT’s estimates of the 10-year impact on the deficit in billions of dollars)
Impact on
Deficita
Provision
Brief Description
(2016-2025)
Individual Mandate
Most individuals are required to maintain health insurance coverage or
b
pay a penalty for noncompliance. The mandate went into effect in 2014.

4 For information about the IPAB, see CRS Report R44075, The Independent Payment Advisory Board (IPAB):
Frequently Asked Questions, by Jim Hahn, Christopher M. Davis, and Edward C. Liu.
5 Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT), Estimate of Direct Spending and
Revenue Effects of H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act, As Passed by the
House and Following Enactment of the Bipartisan Budget Act of 2015, November 4, 2015, at https://www.cbo.gov/
sites/default/files/114th-congress-2015-2016/costestimate/hr3762aspassed.pdf. (Hereinafter, CBO and JCT, Direct
Spending and Revenue Effects of H.R. 3762.) For estimates that include macroeconomic feedback, see CBO and JCT,
Cost Estimate: H.R. 3762 Restoring Americans’ Healthcare Freedom Reconciliation Act of 2015, October 20, 2015, at
https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/costestimate/hr3762.pdf. (Hereinafter, CBO and
JCT, Cost Estimate of H.R. 3762.) It should be noted that the estimates with macroeconomic feedback include repeal of
the auto-enrollment requirement (which has since been repealed by the Balanced Budget Act of 2015, P.L. 114-74) and
repeal of the Independent Payment Advisory Board, which was dropped from H.R. 3762 before it passed the House.
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Impact on
Deficita
Provision
Brief Description
(2016-2025)
Employer Mandate
Large employers must either provide health insurance coverage or face
-$168.5b
potential employer tax penalties. The requirement went into effect in
2015 for employers with at least 100 ful -time-equivalent (FTE)
employees and is to be expanded to employers with at least 50 FTE
employees in 2016.
Excise Tax on High-Cost
A 40% excise tax is to be assessed on the amount of employer-
$91.1
Employer-Sponsored
sponsored health coverage that exceeds a specified dol ar limit. The tax
Coverage
is to go into effect in 2018.
Medical Device Tax
A 2.3% tax is imposed on the manufacturer or importer of medical
$23.9
devices intended for consumption in the United States. The tax went
into effect in 2013.
Auto-enrol ment
Employers with more than 200 ful -time employees are required to
$0.0c
automatically enrol new employees in health insurance and to continue
coverage for current employees. Employers are to comply with the
requirement once regulations are issued.
Prevention and Public
The PPHF was authorized and permanently appropriated under the
-$12.7d
Health Fund (PPHF)
ACA. The PPHF is to be administered by the HHS Secretary, and the
Secretary is instructed to transfer amounts from the PPHF to HHS
accounts for prevention, wellness, and public health activities. The
PPHF annual appropriation is currently $1 bil ion through FY2017, and
thereafter it wil increase in increments, becoming $2 bil ion for FY2022
and each subsequent fiscal year.
Total Impact on Deficit
-$78.1e
Source: Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT), Estimate of Direct Spending
and Revenue Effects of H.R. 3762, the Restoring Americans’ Healthcare Freedom Reconciliation Act, As Passed by the
House and Following Enactment of the Bipartisan Budget Act of 2015, November 4, 2015, at https://www.cbo.gov/
sites/default/files/114th-congress-2015-2016/costestimate/hr3762aspassed.pdf.
Notes: ACA = Patient Protection and Affordable Care Act (P.L. 111-148, as amended).
a. Excluding any macroeconomic effects.
b. CBO and JCT provide one estimate for repealing both the individual and employer mandates.
c. The Bipartisan Budget Act of 2015 (P.L. 114-74) was enacted November 2, 2015, and repeals the auto-
enrol ment requirement. As such, CBO and JCT estimate that repeal of the requirement in H.R. 3762 wil
have no effect relative to current law.
d. This estimate includes the projected reduction in Medicaid spending ($235 mil ion) and additional spending
on community health centers ($470 mil ion); see discussion in the “Federal Funding for Planned Parenthood
and Health Centers” section of this report.
e. The total also includes interactive effects (i.e., the additional budgetary effects of the provisions in
combination with one another).
In addition to repealing certain ACA provisions, H.R. 3762 would prohibit federal funds from
being made available to a state, whether directly or through a contracted managed-care
organization, for a period of one year following enactment to any entity (including its affiliates,
subsidiaries, and clinics) that meets the following criteria:
 First, the entity is a nonprofit community provider primarily engaged in
providing family planning and reproductive health services and related medical
care.
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 Second, the entity provides abortions other than in circumstances where the
pregnancy was the result of rape or incest or where the pregnancy places the
woman’s life in danger.
 Third, the entity’s Medicaid expenditures for FY2014 exceeded $350 million.
Based on these criteria, CBO inferred that only PPFA and its affiliates and clinics would be
affected (although CBO did not rule out the possibility that other health care clinics might also be
impacted). CBO estimated that $235 million could be saved—mainly from the Medicaid
program—as a result of this one-year funding restriction.
Finally, H.R. 3762 would appropriate an additional $235 million for each of FY2016 and FY2017
to the federal health centers program.6
Policy Implications of Repeal
This section provides a brief overview of the
potential policy implications associated with
Estimated Effects on Health
each of the ACA repeal provisions in H.R. 3762.
Insurance Coverage
While the bill would repeal a number of ACA
The Congressional Budget Office (CBO) and the Joint
provisions, it would not repeal the entirety of the
Committee on Taxation (JCT) estimate that repealing
ACA. If the bill were to be enacted as is, many
the individual mandate, the employer mandate, the
Cadil ac tax, and the auto-enrol ment requirement would
ACA provisions would remain intact, such as the
have a net effect of reducing the number of individuals
health insurance exchanges and the availability
with health insurance coverage.7 They estimate that
of financial assistance through the exchanges.
repealing the provisions would result in 16 mil ion more
uninsured individuals in most years after 2016.
This section is not intended to provide a
CBO and JCT estimate that the decrease in coverage
comprehensive analysis of the impact of
would be the result of 7 mil ion fewer individuals with
repealing the ACA provisions included in the
non-group coverage, 5 mil ion fewer with employer-
bill, but it does provide an overview of potential
sponsored insurance, and about 4 mil ion fewer covered
policy implications, including those that may
under Medicaid or the State Children’s Health Insurance
Program (CHIP).
occur because some ACA provisions would
The reduction in coverage would be largely the result of
remain in place. For additional information,
repealing the individual mandate and its associated
please contact one of the Congressional Research
penalties, but repealing the employer mandate, the
Service (CRS) analysts identified in the key
Cadil ac tax, and the auto-enrol ment requirement also
policy staff table at the end of the report.
would contribute to the estimated shifts in coverage.
Repealing the individual mandate would mean fewer
individuals would obtain coverage. Repealing the
Individual Mandate
employer mandate, the Cadil ac tax, and the auto-
enrol ment requirement would affect whether employers
H.R. 3762 would repeal the ACA’s individual
offer and whether employees take up coverage.
mandate and its associated penalty,8 effective
Source: Congressional Budget Office (CBO) and Joint
January 1, 2015.
Committee on Taxation (JCT), Cost Estimate: H.R. 3762
Restoring Americans’ Healthcare Freedom Reconciliation Act
As shown in Table 1, CBO and JCT estimate a
of 2015, October 20, 2015.
net savings from repealing both the individual
and employer mandates.9

6 See CRS Report R43937, Federal Health Centers: An Overview, by Elayne J. Heisler.
7 These estimates were developed prior to repeal of the auto-enrollment requirement in the Balanced Budget Act of
2015.
8 For an overview of the individual mandate, see CRS Report R41331, Individual Mandate Under the ACA, by Annie
L. Mach.
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Individuals and employers that do not comply with the mandates are required to pay penalties,
and if the mandates are repealed, the federal government is expected to lose revenue in the form
of forgone tax receipts. However, the loss of revenue would not be great as the savings that would
be incurred by repealing the mandates, particularly the individual mandate. Eliminating the
individual mandate would reduce the number of individuals with coverage (see the text box for
more details). This would mean fewer individuals who receive federally subsidized coverage,
whether under Medicaid, the State Children’s Health Insurance Program, or by receiving federal
financial assistance through a health insurance exchange, resulting in budgetary savings for the
federal government.
The individual mandate is often described as working in conjunction with certain ACA market
reforms, including guaranteed issue and renewability, nondiscrimination based on health status,
coverage of preexisting health conditions, and rating restrictions.10 These reforms require insurers
to accept all applicants and restrict insurers’ ability to vary premiums based on an applicant’s
health status and other characteristics. The individual mandate works in tandem with these
reforms by encouraging healthy individuals to participate in the market so that insurers’ risk pools
are not entirely composed of individuals who are at high risk of using health care services.
The House reconciliation bill would repeal the individual mandate and the penalty, but it would
not modify or repeal any of the ACA market reforms. The concern of many is that this scenario
could lead to adverse selection, in which individuals who need health care services purchase
coverage and stay in the risk pool while those who do not have the same desire for coverage leave
the pool and stop paying premiums. Because health insurance premiums are based on estimated
costs for covering a risk pool, this situation could cause the cost of coverage to rise for the
remaining participants, thus making coverage even less attractive to those who do not perceive a
need for coverage. This pattern could lead to an increasingly expensive risk pool.
This concern is particularly salient with respect to the non-group (i.e., individual) market. The
ACA market reforms, along with the financial assistance available through the health insurance
exchanges,11 have increased access to non-group coverage. Premiums for non-group coverage
would likely increase if the individual mandate were repealed, but accessibility to the non-group
market remained the same. CBO and JCT estimate that if the mandate were repealed, premiums
for policies sold in the non-group market would increase by about 20% in years after 2016.12
Employer Mandate
The bill would repeal the ACA’s employer shared responsibility provisions (i.e., employer
mandate). The mandate went into effect on January 1, 2015, for employers with at least 100 full-
time equivalent (FTE) employees, and it is to be expanded to apply to employers with at least 50
FTE employees beginning in 2016.13 H.R. 3762 would repeal the employer mandate effective

(...continued)
9 In their cost estimate for H.R. 3762, CBO and JCT did not provide separate estimates for repealing the individual and
employer mandates.
10 For more information about the market reforms, see CRS Report R42069, Private Health Insurance Market Reforms
in the Affordable Care Act (ACA), by Annie L. Mach and Bernadette Fernandez.
11 The financial assistance, premium tax credits, and cost-sharing subsidies are not affected by the House reconciliation
bill.
12 CBO and JCT, Cost Estimate of H.R. 3762.
13 For detailed information about the employer mandate, see CRS Report R43981, The Affordable Care Act’s (ACA)
Employer Shared Responsibility Determination and the Potential ACA Employer Penalty, by Julie M. Whittaker.
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January 1, 2015. Thus, employers no longer would be exposed to a potential tax penalty for not
offering affordable and adequate health coverage.
According to CBO and JCT, elimination of the employer mandate would result in a loss of
revenue to the federal government—$166.9 billion over the 2016-2025 period.14 This revenue
loss is partially obscured in the CBO and JCT estimate of the budgetary effect of repealing both
the employer mandate and the individual mandate where a net budgetary savings is reported (see
Table 1). The net budgetary savings is largely the result of repealing the individual mandate, as
discussed in the “Individual Mandate” section of this report.
Additionally, CBO and JCT estimate that some employers that are projected to offer health
insurance to their employees under current law would no longer do so if the employer mandate
were repealed. However, in their projections they estimate that the reduction in offers of
employment-based coverage would be mitigated by many employers continuing to offer coverage
in order to attract the best available workers at the lowest cost. (See the text box for more details
about how H.R. 3762 could affect health insurance coverage.)
Excise Tax on High-Cost Employer-Sponsored Coverage
The bill would repeal the ACA’s excise tax on high-cost employer-sponsored coverage (the so-
called Cadillac tax), which is scheduled to take effect in 2018. The Cadillac tax is a 40% excise
tax that is to be assessed on the aggregate cost of employer-sponsored health coverage that
exceeds a dollar limit.15
The Cadillac tax was included in the ACA in part to raise revenue to offset the cost of other ACA
provisions, primarily the financial subsidies available through the health insurance exchanges. As
shown in Table 1, eliminating the tax would result in a loss of revenue to the federal government.
CBO and JCT indicate that the loss of revenue is the result of foregone tax receipts as well as less
shifting to lower-cost coverage to avoid the tax.
The idea that the Cadillac tax would incentivize employers to shift employees into or encourage
employees to have lower-cost health coverage is part of the expectation that the tax would help
curtail the growth in health care costs. According to a CRS analysis, the tax could, under certain
assumptions, lead to an overall decline in national health expenditures of 0.6%-0.9% in 2018 and
2.5%-3.6% in 2024.16 In other words, the tax could result in a gross reduction in national health
expenditures of $7.6-$11.0 billion in 2018 and $41.0-$60.3 billion by 2024. The Cadillac tax is
thought to be a source of downward pressure on the cost of employer-sponsored coverage and the
growth in health care costs. Repealing it would eliminate that possibility.
Medical Device Tax
H.R. 3762 would repeal the medical device tax, which went into effect on January 1, 2013. The
effective date of repeal would be calendar quarters beginning after the bill is enacted.

14 CBO and JCT, Cost Estimate of H.R. 3762.
15 For an overview of the tax, see CRS Report R44147, Excise Tax on High-Cost Employer-Sponsored Health
Coverage: In Brief, by Annie L. Mach. For an economic analysis of the tax, see CRS Report R44160, The Excise Tax
on High-Cost Employer-Sponsored Health Coverage: Background and Economic Analysis, by Sean Lowry.
16 For more explanation and calculations, see CRS Report R44159, The Excise Tax on High-Cost Employer-Sponsored
Health Insurance: Estimated Economic and Market Effects, by Jane G. Gravelle.
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The medical device industry has argued that the ACA’s tax on its products has reduced
employment and deterred innovation, particularly in smaller firms (which are subject to the tax
whether or not they are earning a profit).17 In contrast, other analysis has found that the tax likely
will be passed on to consumers—who are relatively insensitive to price—in the form of higher
prices and that the effects of the tax on the share of workers employed in the industry likely will
be small.18
CRS analysis of Census Bureau and JCT data found that roughly half of U.S. medical device
production is expected to be exempt from the tax because of the statutory exemptions (e.g.,
eyeglasses, hearing aids, and contact lenses), the “retail exemption” outlined in regulations, or the
exemption for exported devices.19
Although the medical device tax does not meet typical justifications for selective excise taxes, the
tax could arguably be better understood within the larger context of financing health reform.
Generally, selective excise taxes are justified because a particular behavior causes negative
spillover effects to society or because users of a public good or service receive some sort of
private benefit. It appears that some justifications for the medical device excise tax could be
provided based on traditional economic principles, but the justifications, in most cases, are weak.
The device tax could be better understood to meet revenue needs, alongside other ACA taxes and
fees on health insurers and pharmaceutical companies that potentially stand to benefit as more
people enroll in health insurance as a result of the ACA’s reforms.
Auto-enrollment Requirement
H.R. 3762 would repeal the ACA’s requirement that employers with more than 200 full-time
employees automatically enroll new employees in coverage and continue coverage for current
employees. On November 2, 2015, the Bipartisan Budget Act of 2015 (P.L. 114-74) was enacted,
which repeals the auto-enrollment requirement. Therefore, the inclusion of this provision in H.R.
3762 would have no effect relative to current law.
Prevention and Public Health Fund
H.R. 3762 would eliminate the authority and permanent annual appropriation for the Prevention
and Public Health Fund (PPHF). It also would rescind any unobligated funds appropriated to the
PPHF for the fiscal year in which the reconciliation bill was enacted.
If PPHF funds were to become unavailable, additional regular appropriations or another funding
source would need to be provided to sustain programmatic activities currently funded by the
PPHF. In the six years from FY2010, when the PPHF was established, through FY2015, almost
three-quarters of PPHF funding—a total of $3.8 billion—has been distributed to the Centers for
Disease Control and Prevention (CDC).20 The agency’s budget authority (i.e., funds available
through annual discretionary appropriations acts) has decreased by about 6% over the same time

17 For more information, see AdvaMed, “Medical Device Tax,” at http://advamed.org/issues/19/medical-device-tax.
18 For more information and analysis, see CRS Report R43342, The Medical Device Excise Tax: Economic Analysis, by
Jane G. Gravelle and Sean Lowry; and CRS Report R42971, The Medical Device Excise Tax: A Legal Overview, by
Andrew Nolan.
19 Ibid.
20 Appendix C in CRS Report R43304, Public Health Service Agencies: Overview and Funding (FY2010-FY2016),
coordinated by C. Stephen Redhead and Agata Dabrowska. See also John Reichard, “Advocates: CDC, Other Agencies
Face Big Cuts Fast if Prevention Fund Ends,” CQ HealthBeat, June 18, 2012.
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frame.21 CDC programs that received substantial funding from the PPHF for FY2015 include,
among others, immunization grants to states, efforts to prevent health care-associated infections,
and several programs to prevent or control chronic diseases such as diabetes and cancer. The
Administration for Community Living (ACL) and the Substance Abuse and Mental Health
Services Administration (SAMHSA) also received small amounts of PPHF funds for FY2015, for
programs on Alzheimer’s disease prevention, chronic disease management, and falls prevention
among seniors, and Garrett Lee Smith suicide prevention grants, respectively.22
Federal Funding for Planned Parenthood and
Health Centers
The bill’s one-year prohibition on federal funding—made available to a state either directly or
through a managed-care organization—for any entity that meets the criteria set out in the
legislation, which were summarized in the “House Reconciliation Bill” section of this report,
would probably impact the Planned Parenthood Federation of America (PPFA) and its affiliates
and clinics.23 The bill further specifies that this prohibition would be implemented
notwithstanding certain programmatic rules (e.g., the Medicaid freedom of choice of provider
requirement).24
PPFA is an umbrella organization supporting 59 independent affiliates that operate approximately
700 health centers across the United States. Government funding—which includes federal, state,
and local funds—constitutes the PPFA’s largest source of revenue.25 PPFA receives federal grants
(either directly or through another entity, such as a state) and reimbursements for providing
services to beneficiaries enrolled in federal programs (e.g., Medicaid). It does not receive a direct
annual appropriation of any kind.
CBO estimates that PPFA and its affiliated health clinics receive approximately $450 million
annually in federal funds, of which an estimated $390 million is from the Medicaid program.26
CBO notes that the effect of the one-year federal funding prohibition would be uncertain and that
this uncertainty applies to both federal spending and the potential effects on Medicaid beneficiary
access to care.27 According to CBO’s analysis, some Medicaid beneficiaries would still use a
PPFA affiliate for services, in which case the affiliate would have to use nonfederal funds to

21 Table 4 in CRS Report R43304, Public Health Service Agencies: Overview and Funding (FY2010-FY2016),
coordinated by C. Stephen Redhead and Agata Dabrowska.
22 HHS, “Prevention and Public Health Fund,” FY2015 Funding Distribution Table, at http://www.hhs.gov/open/
prevention/index.html.
23 For historical information about the amounts of federal funding made available to the Planned Parenthood Federation
of America (PPFA), see U.S. Government Accountability Office (GAO), Health Care Funding: Federal Obligations to
and Expenditures by Selected Entities Involved in Health-Related Activities, 2010-2012, GAO-15-270R, March 20,
2015, at http://www.gao.gov/products/GAO-15-270R.
24 See “Who Provides Reproductive Health Care for Medicaid Beneficiaries?” in CRS Report R44130, Federal Support
for Reproductive Health Services: Frequently Asked Questions, coordinated by Elayne J. Heisler.
25 PPFA reported total revenue of $1.3 billion in its 2014 annual report, of which 41% was from government sources.
See PPFA, Our Health. Our Decisions. Our Moment., 2013-2014 Annual Report, 2014, at http://issuu.com/actionfund/
docs/annual_report_final_proof_12.16.14_/0.
26 For CBO cost estimate, see CBO, Cost Estimate: H.R. 3134, Defund Planned Parenthood Act of 2015, as Introduced
on July 21, 2015, September 16, 2015, at https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/
costestimate/hr3134.pdf.
27 CBO and JCT, Cost Estimate of H.R. 3762.
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Potential Policy Implications of the House Reconciliation Bill (H.R. 3762)

provide services. In other cases, the Medicaid beneficiary would access an alternative provider
that could be reimbursed with federal Medicaid funds. Finally, some Medicaid beneficiaries could
go without services, including preventive screenings and contraceptive services, which could
increase costs in the future.
The effects of the one-year federal funding prohibition on the operations of PPFA are also
uncertain because federal funding is not the entity’s sole funding source. Moreover, it is not clear
how a funding ban would affect any particular PPFA-affiliated clinic because the relative share of
federal funding available at a given health center varies.
Overall, CBO estimated that $235 million would be saved—mainly from the Medicaid
program—from a one-year prohibition on funding to PPFA.28
H.R. 3762 coupled the one-year ban on PPFA funding with two years of additional funding—
$235 million for each of FY2016 and FY2017—for the federal Health Center Program.29 Much of
the legislation to ban federal funding for PPFA and its affiliates that was introduced prior to the
reconciliation bill included language that would maintain federal funding overall for reproductive
health services (and other types of services that PPFA provides).30 Similar to what was included in
these bills, H.R. 3762 would redirect funds to other facilities, such as health centers, on the
assumption that these facilities could maintain services for Medicaid beneficiaries who otherwise
would have sought services at a PPFA affiliate. CBO estimates of these other bills cast doubt on
this assumption as they find reduced access in both the short and longer term and increased
federal spending over a 10-year period, mainly because pregnancies were not averted.31


28 In its initial estimate of a one-year funding ban to PPFA, CBO noted that $235 million was its midrange estimate.
See CBO, H.R. 3134, Defund Planned Parenthood Act of 2015, as Introduced on July 21, 2015, Washington, DC,
September 15, 2015, https://www.cbo.gov/sites/default/files/114th-congress-2015-2016/costestimate/hr3134.pdf.
29 For information about federal health centers, see CRS Report R43937, Federal Health Centers: An Overview, by
Elayne J. Heisler.
30 For example, see H.R. 3134, H.R. 3301, S. 1861, and S. 1881.
31 See CBO and JCT, Cost Estimate of H.R. 3762; CBO, “Legislation Providing for Reconciliation, House Committee
on the Budget,” October 8, 2015; and CBO, Cost Estimate: H.R. 3134, Defund Planned Parenthood Act of 2015, as
Introduced on July 21, 2015, September 15, 2015, at https://www.cbo.gov/sites/default/files/114th-congress-2015-
2016/costestimate/hr3134.pdf. Another CBO cost estimate examines a broader prohibition over federal funds to PPFA
and finds that the broader prohibition would increase the deficit by $130 million over a 10-year period. See letter from
Keith Hall, Director of CBO, to Representative Kevin McCarthy, “Re: Budgetary Effect of Legislation That Would
Permanently Prohibit the Availability of Federal Fund to Planned Parenthood,” September 22, 2015.
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Potential Policy Implications of the House Reconciliation Bill (H.R. 3762)

Author Contact Information

Annie L. Mach, Coordinator
C. Stephen Redhead
Analyst in Health Care Financing
Specialist in Health Policy
amach@crs.loc.gov, 7-7825
credhead@crs.loc.gov, 7-2261
Elayne J. Heisler
James V. Saturno
Specialist in Health Services
Specialist on Congress and the Legislative Process
eheisler@crs.loc.gov, 7-4453
jsaturno@crs.loc.gov, 7-2381
Sarah A. Lister
Julie M. Whittaker
Specialist in Public Health and Epidemiology
Specialist in Income Security
slister@crs.loc.gov, 7-7320
jwhittaker@crs.loc.gov, 7-2587
Sean Lowry

Analyst in Public Finance
slowry@crs.loc.gov, 7-9154

Key Policy Staff
Area of Expertise
Name
Phone
Email
Reconciliation
Jim Saturno
7-2381
jsaturno@crs.loc.gov
Individual Mandate
Annie Mach
7-7825
amach@crs.loc.gov
Employer Mandate
Julie Whittaker
7-2587
jwhittaker@crs.loc.gov
Cadil ac Tax
Annie Mach
7-7825
amach@crs.loc.gov

Sean Lowry
7-9154
slowry@crs.loc.gov
Medical Device Tax
Sean Lowry
7-9154
slowry@crs.loc.gov
Auto-enrol ment
Annie Mach
7-7825
amach@crs.loc.gov
PPHF
Sarah Lister
7-7320
slister@crs.loc.gov
Federal Funding for Planned
Elayne Heisler
7-4453
eheisler@crs.loc.gov
Parenthood and Community Health
Centers

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