Modern Healthcare: GOP Senators likely to pass ACA repeal bill because failure is not an option

Senate Majority Leader Mitch McConnell faces a seemingly herculean task in getting at least 50 Republican senators with sharply diverse views to reach consensus on a bill to repeal and replace the Affordable Care Act.

After that, he and his lieutenants will have to forge an agreement on the legislation with the generally more conservative House Republicans, who passed their widely panned replacement bill earlier this month. Senate Republicans intend to move the bill through the budget reconciliation process with no Democratic support. No committee hearings are planned. With 52 GOP senators, McConnell can’t afford more than two defectors. Vice President Mike Pence could be called on to break a tie vote.

On top of that, they have to speed this complex legislation through Congress by August or September to clear the path for their next big agenda item, a budget reconciliation bill with major tax reforms and cuts.

Despite these hurdles, it wouldn’t be smart to bet against McConnell and his colleagues. There are growing signs they could pull it off. That’s because they and President Donald Trump need to pass an ACA repeal bill-their central promise to voters for the past seven years-to move forward with tax reform and better position themselves to keep control of Congress in the 2018 elections. They simply can’t afford to fail, as the stunning resurrection of the once-dead House bill showed.

“The risk of not passing something is greater than passing something, as bad as it may be,” said Tom Miller, a conservative health economist at the American Enterprise Institute. “Whatever works for the moment to get it passed is what they’ll have to do.”

Still, it’s hardly a sure thing, given the gulf in views between such moderates as Sen. Lamar Alexander of Tennessee and conservatives such as Sen. Ted Cruz of Texas, both of whom McConnell named to a 13-member bill-drafting team.

“I don’t think consensus will come easy, and I’m quite confident this will take a long time,” said Tom Daschle, a former Democratic Senate majority leader, who hopes Republicans ultimately realize their legislation will be more durable if they work with Democrats.

The challenge for Senate Republicans is to make their bill less politically toxic than the House bill, which the Congressional Budget Office initially projected would reduce the number of insured Americans by 24 million and could weaken protections for millions of people with pre-existing medical conditions.

Only 38% of voters approve of the House’s American Health Care Act, compared with 44% who disapprove, according to a new Morning Consult/Politico poll. In contrast, 50% now approve of the Affordable Care Act.

Some Senate Republicans have said it will take them at least a couple of months to craft and pass a bill, but they can’t take too long. “If they want to have a budget resolution for tax reform purposes, the Senate needs to close shop on this before the July Fourth recess,” Miller said.

It’s expected McConnell and his colleagues will propose spending more money to soften the AHCA’s big insurance coverage losses. A bill that covers more people and costs more would have to survive challenges from hard-line House conservatives, not to mention overcome Senate budget rules that bar a reconciliation bill from increasing federal spending.

Some observers think McConnell’s inclusion of Cruz and Utah’s Mike Lee on the bill-drafting panel shows that he’s focused on winning conservative votes. Sens. Susan Collins of Maine and Bill Cassidy of Louisiana, who sponsored a more centrist reform bill that would let states choose between the ACA framework and free-market models and would keep the ACA’s taxes, were not named to the panel.

“That potentially skews the bill pretty far to the right,” said James Capretta, a conservative health policy analyst at the American Enterprise Institute, who favors richer subsidies for lower-income people than the House bill offers.

The CBO is set to issue an updated coverage and cost score for the House bill the week of May 22, which will set the parameters for the Senate’s bill. It will have to deliver at least the same level of budget savings as the AHCA. Senators will have to be creative to achieve that, given their quest for better coverage numbers.

An unexpected political complication last week was Trump’s controversial firing of FBI Director James Comey. The Senate will have to hold confirmation hearings to consider Trump’s nominee to succeed Comey. The process could be drawn out and contentious, and steal time and attention away from passing healthcare legislation.

As senators start drafting their bill, one of the biggest potential holdups is the split between Republicans who want to quickly end the ACA’s Medicaid expansion-which has extended coverage to nearly 14 million low-income adults in 31 states-and those who want to protect their state’s expansion. There’s also concern around the AHCA’s plan to cap and cut total federal Medicaid payments, which could force states to slash eligibility, benefits and provider payment rates.

The dramatic Medicaid changes are perhaps the biggest issue for providers, who warn that rolling back expansion and capping federal contributions would slam vulnerable patients and spike uncompensated-care costs. Twenty GOP senators represent states that have expanded Medicaid. Some of those senators, such as Rob Portman of Ohio, Pat Toomey of Pennsylvania and Steve Daines of Montana, already are floating a compromise that would delay the end of enhanced federal payments for several years. The House bill would have halted extra federal payments for new enrollees in 2020, which likely would prompt most states to end their expansion program.

Repeal of extra expansion funding would lead to about 9 million fewer people with coverage by 2026, according to the nonpartisan Committee for a Responsible Federal Budget. Conversely, retaining expansion funding would raise the bill’s cost by $525 billion, the group estimated.

Portman, who had criticized the House bill because of its Medicaid provisions, said last week he supports rolling back the expansion as long as there is a “soft landing” for the states and beneficiaries. More than 700,000 people in his state have gotten coverage under the Medicaid expansion, which is strongly supported by Republican Gov. John Kasich.

No GOP senators, however, have voiced firm opposition yet to the bill’s broader Medicaid restructuring and cuts.

“I think expansion state Republicans’ inclination is to keep the expansion permanently,” said Daschle, who strongly supports the ACA’s coverage expansions. “But they may succumb to maintaining the expansion (temporarily). That illustrates the internal pressure to generate near-unanimity in their caucus.”

Another possible flash point in the Senate is over making premium subsidies more generous than in the House bill for people in the 50-64 age range, for whom the House bill offers much skimpier assistance than the ACA provides. AARP, the senior advocacy group, has blasted this as an “age tax” that would make coverage unaffordable for older people, who disproportionately voted for Trump.

Sen. John Thune of South Dakota is working on a provision to expand the AHCA’s subsidies for older people, using a vaguely worded $85 billion tax change provision in the House bill designed to give senators budget leeway for this purpose. There’s also talk among Senate Republicans of adding an extra adjustment for consumers in rural markets, where premiums tend to be higher.

The various coverage sweeteners being discussed by Senate Republicans will pose financing challenges unless they’re willing to ditch the House bill’s near-total repeal of the ACA’s $1 trillion in taxes that pay for the law’s coverage expansions. Some GOP senators recognize this. There is talk of at least delaying the repeal of some of the taxes, which would lead to a more favorable CBO score on deficit impact.

“I don’t see how you can repeal all the pay-fors that were used to finance the Affordable Care Act and still meet the goal of providing health insurance coverage for people who really need assistance,” Collins told reporters last week.

But conservative senators may push for immediately erasing all the ACA’s taxes, including its Medicare payroll and investment taxes on wealthier people, leaving little room for boosting the House bill’s financial assistance to make coverage affordable.

“Politically speaking, there’s nothing worse than to take healthcare away from poor people and lowering taxes for rich people,” said John Goodman, a conservative health policy analyst who helped develop Cassidy’s reform bill and favors keeping most of the ACA taxes to pay for coverage subsidies.

There are also procedural hurdles. Senate budget reconciliation rules require the bill to produce at least as much budget savings as the House version. In addition, it can’t raise the federal deficit 10 years after it goes into effect.

Those rules also require that all provisions have a budgetary impact. Experts believe some key parts of the House bill, such as giving states flexibility to waive the ACA’s insurance market rules on essential health benefits and risk-rating of premiums, may flunk that Senate procedural test. The Senate parliamentarian advises the Senate chair on whether a bill meets those rules, but the majority can reject that decision.

“They don’t have many options,” Daschle said. “I wouldn’t put it past them to bypass normal budgetary constraints and overrule the chair.”

McConnell will do that “if it’s the difference between 49 and 50 votes,” agreed Rodney Whitlock, a Republican healthcare lobbyist and former Senate GOP staffer.

So far, Senate Republicans have shown little inclination to reach out to Democrats or healthcare industry stakeholders for support or suggestions on how to craft their bill. They know most healthcare groups strongly reject the House framework, which is projected to drive up premiums and out-of-pocket costs and strip down benefits for many consumers, said Billy Wynne, a former Democratic Senate staffer and healthcare lobbyist who represents hospitals and other industry groups.

“If that’s the basic thesis of the Senate bill, it’s going to be hard for healthcare stakeholders to move away from opposing it, because they like to see their patients covered,” he said.

Industry opposition may have little effect. Daschle said the fate of the Senate’s repeal-and-replace effort will rest with GOP moderates who are uncomfortable about taking away the ACA’s coverage expansions and protections. In addition, moderates such as Collins and Sen. Lisa Murkowski of Alaska have objected to provisions in the House bill that cut funding to Planned Parenthood and bar using premium tax credits to buy health plans that cover abortion.

Based on the number of House moderates who ended up voting for the AHCA despite previously saying they had deep reservations, Daschle is worried. “Senate moderates are going to be under the same enormous pressure moderates faced in the House,” he said. “Only time will tell if they cave in a similar fashion.”

McConnell may well succeed in pushing a bill through the Senate. The most perilous point, however, may come when it goes back to the House for approval.

That’s when the 30 or so ultraconservative House Freedom Caucus members may object to the more liberal Senate legislation. “The only chance then is to have some of the House moderates who voted against the AHCA come on board and cover the conservative losses,” said Miller, who thinks not passing a bill would be a political catastrophe for the GOP.

The moderates “will have to choose between declaring failure and swallowing a fill-in-the-blank sandwich,” he said.