The House FY 2017 budget resolution released March 15, 2016, proposes to achieve $7 trillion in deficit reduction over 10 years through a combination of $6.5 trillion in savings coupled with economic growth, assumes the repeal of the Affordable Care Act (ACA) and other health care changes, and includes policy statements on issues like tax reform.

"It is a plan to balance the budget through commonsense reforms and greater economic growth; to create a healthier economy, more secure nation, and a more accountable Washington," said Budget Committee Chairman Tom Price (R-GA). The resolution was released amid opposition from the House Freedom Caucus, whose members oppose adhering to the Bipartisan Budget Act of 2015's $30 billion increase in Budget Control Act of 2011 discretionary spending caps for FY 2017, to $1.07 trillion. Opposition to the resolution creates uncertainty over whether it will have the necessary votes to pass the House. Senate Budget Committee Chairman Mike Enzi (R-WY) announced last week that his Committee will postpone possible action on a resolution of its own, and that top-line numbers agreed to in the Bipartisan Budget Act of 2015 make possible a regular order appropriations process.

Responding to concerns from Members about the level and timing of spending reductions agreed to in the Balanced Budget Act of 2015, the House budget resolution calls for achieving $30 billion in additional mandatory spending reductions in FY2017 and FY2018 and a total of $140 billion in mandatory spending reductions over the 10-year period outside of the reconciliation process. The Committees that are expected to achieve savings include Agriculture, Energy and Commerce, Financial Services, Judiciary, and Ways and Means. The policies to achieve these savings may include: recovering improper ACA tax credits, requiring a Social Security number to claim the refundable portion of the child tax credit, eliminating enhanced Medicaid payments for prisoners, and ending Medicaid payments for lottery winners.

The House resolution includes reconciliation instructions to a dozen committees — including the Committees on Energy and Commerce, Education and the Workforce, and Ways and Means — to report deficit reduction totaling $8.315 billion over 10 years.

The resolution calls for relevant committees to consider forthcoming recommendations developed by the Speaker's task forces on: health care reform; reducing regulatory burdens; poverty, opportunity, and upward mobility; national security; tax reform; and restoring constitutional authority. The task forces were announced on February 4.

Tax

The tax reform policy statement in the resolution references points made during a recent Ways and Means Committee hearing, including that:

— The US corporate tax restrains economic growth and job creation and "fosters a variety of complicated multinational corporate practices intended to avoid the tax, which have the effect of moving the tax base offshore and destroying American jobs"

— Recent and coming global developments, specifically the OECD Base Erosion and Profit Shifting (BEPS) project, heighten the urgency of tax reform

— The US worldwide tax system puts domestic companies at a significant competitive disadvantage

— "Reforming the tax code would boost the competitiveness of United States companies operating abroad and significantly reduce tax avoidance"

The resolution says Congress should enact legislation to comprehensively reform the tax code that:

— Simplifies the tax code to make it fairer to American families and businesses and reduces the amount of time and resources necessary to comply with tax laws

— Substantially lowers tax rates for individuals and consolidates the current seven individual income tax brackets into fewer brackets

— Repeals the Alternative Minimum Tax

— Reduces the corporate tax rate

— Transitions the tax code to a more competitive system of international taxation

Health care

Chairman Price's FY 2017 budget resolution assumes the repeal of the ACA's coverage expansion provisions, a conversion of Medicaid to a block grant program, a conversion of Medicare to a premium support system beginning in 2024, and reforms to medical liability provisions — proposals that are generally opposed by Democrats.

Affordable Care Act - Chairman Price's budget resolution specifically assumes the repeal of the ACA, including the taxes and fees enacted to help fund the law's coverage expansion. The resolution also assumes the repeal of the ACA's Independent Payment Advisory Board, a board of 15 appointees charged with making recommendations to Congress to control the growth of Medicare spending. The resolution assumes $2.013 trillion in outlay reductions from the ACA repeal.

Medicaid - The resolution assumes the repeal of the ACA's Medicaid expansion and proposes converting the federal share of remaining Medicaid spending to a block grant program called State Flexibility Funds. The resolution calls for giving states greater flexibility to customize their Medicaid programs, and the ability for beneficiaries of Medicaid and CHIP to purchase private health insurance and Health Saving Accounts (HSAs). Additionally, the budget resolution supports work requirements for able-bodied adults who are enrolled in Medicaid. The resolution assumes $1.028 trillion in outlay reductions in Medicaid and related spending.

Medicare - The budget resolution outlines a policy option for converting Medicare to a system in which the federal government would provide a premium support payment that beneficiaries could use to purchase private coverage or traditional Medicare (which would compete with private coverage). The move to a premium support model for Medicare would be in effect in 2024, allowing people currently near retirement to enroll in current Medicare options. The policies assumed in the resolution outlined in the resolution also calls for reworking the fee-for-service benefit to have a single annual deductible for Medicare Part A and B, enacting a catastrophic cap on annual out-of-pocket expenses. The budget resolution assumes $449 billion in outlay reductions from Medicare reforms.

Reserve Funds - Chairman Price's budget resolution includes several health care-related deficit-neutral reserve funds, which would allow the Chairman to revise allocations, aggregates and other appropriate budgetary levels in the resolution to accommodate deficit-neutral legislation that repeals the ACA, promotes alternative healthcare reforms, or expands and improves graduate medical education programs.

Legislative text and a summary of the budget resolution are attached.

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ATTACHMENTS

FY 2017 Budget Resolution

Summary