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The new bipartisan deal to stabilize Obamacare, explained

The plan’s biggest barrier? President Trump.

Sens. Patty Murray (D-WA) and Lamar Alexander (R-TN)
Tom Williams / Getty Images

After months of failed Republican attempts to repeal the Affordable Care Act and on the heels of President Trump’s most direct attack on the law, a bipartisan pair of senators have reached a deal designed to provide some stability to the health care law.

The agreement reached by Republican Sen. Lamar Alexander (R-TN) and Democratic Sen. Patty Murray (D-WA) directly counters the White House’s most overt sabotage of the ACA. It funds the law’s cost-sharing reduction payments to insurers, which help them offer lower deductibles to low-income people, through 2019. Trump announced last week that he would end those payments, throwing the insurance markets into chaos because insurers will still have to offer the lower deductibles even without the federal subsidies.

The deal also provides substantial funding for Obamacare enrollment outreach, which the Trump administration has slashed, for the next two years.

In exchange, Republicans would receive more freedom for states to shape their own health care systems. States would have to jump through fewer hoops for waivers from Obamacare, and approvals would be streamlined. The bill would also expand eligibility for catastrophic coverage under the ACA, a goal for Republicans who want to increase the options consumers have on the marketplace.

Alexander-Murray is the first significant piece of good-faith bipartisan Obamacare legislation to have a real chance of passing this year. Still, there are hurdles: The deal’s supporters acknowledge that they don’t yet have a majority of GOP senators on board. House Republican leaders seem uninterested in such a stabilization package. And while Trump has sometimes sounded supportive of a short-term fix, at other times he seems to want repeal or nothing.

More broadly, the damage Trump has inflicted on Obamacare is already done. The Alexander-Murray deal, should it pass and reach Trump’s desk, likely comes too late to meaningfully affect premiums for next year. Health insurers have already signed their contracts, with many of them substantially increasing rates because of Trump’s attacks on the law.

Trump and Republicans in Congress face a choice about whether to approve any affirmative steps to stabilize Obamacare. The president’s actions have already driven up premiums on the law’s marketplaces. Republicans now have a path toward undoing some of that damage — but their hatred for the law may stop them from taking it.

How Alexander-Murray would reverse Trump’s sabotage

Trump has sown uncertainty about the Affordable Care Act on multiple fronts. His subordinates have suggested Obamacare’s individual mandate won’t be enforced. His health department slashed funding for enrollment advertising and outreach by tens of millions of dollars. Last week, he announced he would stop the law’s cost-sharing reduction payments.

The attacks have had real effects on insurance premiums for ACA plans, which likely would have increased by single digits on average without Trump’s meddling. But because of uncertainty about CSR payments, enrollment outreach, and the mandate, plans hiked their rates an additional 20 to 30 percent on average.

The Alexander-Murray deal would blunt those attacks. The CSR payments would be approved for the rest of 2017, 2018, and 2019. The bill also provides $106 million in Obamacare funding outreach in 2018 and 2019, with the money being directed to states.

The potential immediate impact isn’t clear. Insurers have already priced their plans, many of them assuming the cost-sharing payments wouldn’t be made, and contracts with the federal government have been signed.

But looking ahead to 2019, the deal would undoubtedly provide more stability to the ACA markets, which were reaching an equilibrium before Trump intervened. The cost-sharing payments would be guaranteed, and plans would know that tens of millions of dollars would be spent on Obamacare outreach.

What Republicans would get out of Alexander-Murray

The Obamacare stabilization measures are the obvious wins for Democrats. Republicans wanted some deregulatory provisions and more state flexibility in return.

The bulk of Alexander-Murray’s changes would be to the ACA’s 1332 waiver program. The law established those waivers for states to pursue their own health care programs, as long as they provided coverage that was as comprehensive and affordable as what Obamacare itself would provide. States have had grand ambitions (like Vermont’s failed single-payer proposal) and more modest ones (like the reinsurance programs, which compensate insurers for high-cost patients, that a few states have pursued this year) for the waivers.

The deal would make several changes to streamline the waiver process, a priority for Republicans:

  • Governors could pursue 1332 waivers on their law; under current law, the state legislature must approve the waiver
  • “Me too” waivers — states pursuing a waiver already approved for another state — would receive expedited approval
  • Waivers would last for six years by default, instead of the current five

The most notable change is to the 1332 program’s so-called guardrails, which are supposed to ensure states are still providing coverage as robust as what Obamacare offers.

Under the ACA right now, health coverage and cost sharing under a 1332 waiver is supposed to be “at least as affordable” as Obamacare coverage. Alexander-Murray would change that standard to “of comparable affordability, including for low-income people, people with serious health needs, and other vulnerable populations.”

How much does that actually change? Potentially not much.

“The language change is pretty modest,” Nicholas Bagley, a law professor at the University of Michigan, told me. “The language change may signal that HHS could approve waivers where the protections are slightly less protective than what we've already got under the ACA — but only slightly. Doing away with cost-sharing protections altogether still isn't possible.”

The other major win for Republicans in the deal would be the expansion of catastrophic coverage under the ACA. Those plans, which have higher out-of-pocket costs than other Obamacare coverage but lower premiums, are currently limited to people under age 30. Alexander-Murray would make them available to everyone.

That does expand the choices consumers have, a priority for Republicans. But the effect on the market is expected to be muted.

“No big deal,” David Anderson at Duke University told me of the concept before the deal was announced. “It won’t help; it won’t hurt.”

The deal faces a dicey path to Trump’s desk — and then, who knows?

So on its merits, the deal, which Alexander and Murray have been negotiating for weeks, has clear wins for both sides. But that doesn’t assure it of passage.

First, its supporters need to find 60 votes in the Senate to overcome a filibuster and get the bill up for a vote. Senate Republican leaders have never been enthusiastic about a stabilization bill, scuttling the Alexander-Murray talks last month in favor of one last run at full repeal.

For now, the deal’s backers acknowledge they still have some work to do on the Republican side.

“I will not tell you that we have a majority of all the Republicans yet,” South Dakota Sen. Mike Rounds, who supports the deal, told reporters Tuesday. “But I think we’re getting closer.”

If the bill does get out of the Senate, passage in the House is no sure thing. House Speaker Paul Ryan distanced himself from the Senate plan in a statement to Axios.

"The speaker does not see anything that changes his view that the Senate should keep its focus on repeal and replace of Obamacare,” a Ryan spokesperson said.

Some corners of the House, most notably Rep. Mark Meadows, the chair of the archconservative Freedom Caucus, were more positive about the Alexander-Murray deal.

But others were decidedly not.

"The GOP should focus on repealing & replacing Obamacare, not trying to save it. This bailout is unacceptable,” Rep. Mark Walker (R-NC), who chairs the influential Republican Study Committee, said in a statement.

Then there’s Trump. Over a few hours, the president seemed to oscillate between supporting and skewering the deal.

"While I commend the bipartisan work done by Sens. Alexander and Murray — and I do commend it — I continue to believe Congress must find a solution to the Obamacare mess instead of providing bailouts to insurance companies," he said during a speech at the conservative Heritage Foundation Tuesday night.

Then Alexander reported on Wednesday morning that Trump had called him to offer encouragement.

But mere minutes later, Trump poured cold water on the deal again.

Republican aides were worried last month that Trump’s veto pen was a real threat to any bipartisan health care deal. It’s not yet clear whether that threat has subsided or what the president might do if Alexander-Murray actually reaches his desk.

The most likely path to law for the bill is probably wrapping it into a December deal to fund the government and lift the debt ceiling. Standalone action on health care seems difficult, but adding it to a must-pass vehicle could force the issue.

“People think the only way this becomes law is if it gets rolled into an end-of-year package,” one lobbyist told me.

So the unveiling of Alexander-Murray is a meaningful step toward defusing the partisan health care tensions of the past nine months. While the bill itself doesn’t have any game-changing provisions, it would provide some real stability for the health care law going forward.

But its passage can’t be assumed. With Trump still bent on gutting Obamacare, and Republicans still smarting from their failure to repeal it, dealmaking with Democrats could still prove too much to swallow.