After a month of debating their health care plan, Senate Republicans say they’re ready to start writing draft legislation next week. That doesn’t mean they’re close to actually repealing and replacing Obamacare. Far from it.
Talks among a small group of Republican senators have illustrated the divisions the GOP faces in rounding up the votes needed to pass its bill — particularly over money — and suggested few bridges to compromise. The party has little margin for error. Republicans can only lose two of their own members in the Senate, or the bill will go down.
"I don't know how we get to 50 (votes) at the moment,” Senate Majority Leader Mitch McConnell (R-KY) told Reuters this week. “But that's the goal.”
The legislative clock is ticking, other items on the Trump administration’s domestic agenda are stalled, and the GOP is out of procedural excuses to delay a vote, now that the Congressional Budget Office has scored the House-passed version of the bill. Senators have openly said it could take a month or two to produce a plan, and aides have said privately that these talks could push into the month-long August recess that Congress usually takes to leave Washington.
If the effort is to succeed, these are the issues Republicans still have to work through.
1) What’s more important: increasing coverage or reducing costs?
Senate Republicans, particularly conservatives, are largely evaluating their health proposals on the question of how any legislation would affect premium costs for Americans who keep their insurance — and not on how many millions more people might be uninsured in the shift away from the Affordable Care Act.
“Most of our members are focused on premiums and will this lower costs?” Sen. John Thune (R-SD), the No. 3 Republican in the chamber, told reporters this week. “Bottom line, that’s what our members are most concerned about.”
But President Trump’s repeated promise of universal coverage — “we’re going to have insurance for everybody” — hangs over a bill that would result in 23 million fewer insured Americans, according to the CBO score of the House version. Some Senate Republicans say their health care bill shouldn’t violate Trump’s principles by increasing the number of uninsured Americans.
“Trump’s contract with the American people is that he’s going to continue the coverage that people have,” Sen. Bill Cassidy (R-LA) said recently. He added this week that increasing the uninsured rate could also drive up premiums. “The bigger your pool of uninsured, the more it jacks up [premiums].”
2) How quickly will they roll back Obamacare’s Medicaid expansion?
A sizable minority of Senate Republicans — 20 of them — represent states that expanded Medicaid under Obamacare. More than half of the 20 million people covered through the health care law got their insurance from Medicaid.
The House bill would start to phase out the expansion after 2019, by cutting federal funding once people leave the Medicaid rolls. Some Senate Republicans, led by Rob Portman of Ohio, have argued for a more gradual reduction of that funding — perhaps over five years.
“Our concern is that we have to have a softer landing to ensure that states can pick up the slack and continue to provide coverage,” Portman said, noting that Medicaid is a top provider of addiction treatment in the midst of an opioid crisis killing more than 30,000 Americans annually. “There ought to be a glide path, where you do not have the cliff that the House provides.”
Some conservatives, such as Pat Toomey of Pennsylvania, have signaled an openness to that so-called “glide path.” But others are wary of letting the Medicaid expansion stick around for too long, because future Congresses might decide to keep it for good.
3) How much will they subsidize low-income Americans?
Senate Republicans have said for a while that they want to increase the financial assistance that the House bill makes available for people to purchase health coverage. The House bill bases its tax credits almost entirely on age — not income, as Obamacare does — though the credits phase out at higher incomes. Senators say they want to increase the aid for lower-income Americans.
“We need a more robust tax credit than what the House had,” Sen. John Hoeven (R-ND) said.
Thune detailed a proposal in March that would do that, and he told reporters on Thursday that he still expected the bill to include a similar provision.
To spend more on poor people, the Senate could scrap one of the tax breaks in the House bill. The legislation includes changes to itemized tax deductions for medical expenses that the Senate could roll back and then use that money — Thune estimated it could be more than $90 billion — to pump up the tax credits.
4) Should they adjust that financial aid based on geography?
The House’s tax credits also don’t adjust for geography, as Obamacare’s do. States have dramatically different health care costs; rural states have higher costs than more urban or smaller states. The Senate may need to adopt the Obamacare approach, in order to pacify some rural-state senators whose constituents would be stung by the House formula.
The Alaska senators — Lisa Murkowski and Dan Sullivan — are particularly sensitive to that issue; their state has the highest health care costs in the country, and they benefit greatly from Obamacare’s geographic adjustments.
The problem, again, is cost. Adjusting for geography would make the bill more expensive. “There are some who want that,” Thune said, “but it’s just hard to figure out how to do it.”
5) Will they water down the tax relief in the House bill?
Money, clearly, hangs over many of these questions. But under the complex Senate rules Republicans are using to avoid a Democratic filibuster and pass their bill with a bare majority, the plan has to save as much money as the House bill did: $119 billion.
So any increased spending on Medicaid or tax credits must be offset with more revenue somewhere else. One possibility that has been discussed would be keeping the various Obamacare taxes that the House bill repeals for a little while longer. Those taxes would be collected for a few more years, bringing in more revenue, before they were finally repealed.
Some more moderate senators have said they’re receptive to that idea. But some of their senior colleagues have countered that Republicans have run for years on rolling back Obamacare’s taxes on the wealthy and health care industries. They can’t delay.
“In my view, it would be inappropriate, after spending the better part of a decade railing against Obamacare’s burdensome, job-killing taxes, for us to then turn around and say that some of them are fine so long as they’re being used to fund Republican health care proposals,” Sen. Orrin Hatch (R-UT), the chair of the powerful Finance Committee, said on the Senate floor this week. “It’s very simple: We need to repeal all of the Obamacare taxes.”
6) Or will they lower the Medicaid spending caps even further?
If enough Republicans insist on repealing Obamacare taxes immediately, there aren’t many other places to find savings. The other option under discussion would be to ratchet down spending caps the House bill places on Medicaid even further — which is to say, to further reduce spending on health care that helps the very poor.
The House didn’t just phase out Obamacare’s Medicaid expansion; it restructures the whole program’s financing, instituting a spending cap. The House bill is expected to cut federal funding by $834 billion over 10 years, for a program that is the nation’s single biggest insurer, covering about 70 million people.
One important feature of the Medicaid spending cap is the metric used to increase the cap over time, because health care costs are projected to keep growing. The House bill used a metric tied to the health care costs that consumers pay, with a small additional boost for the elderly and disabled people covered by the program.
Some Senate conservatives want to use a metric that would cut spending even more, perhaps one based on historical Medicaid growth. That would save more money in the bill and might eliminate the need to delay any repeal of the taxes — but it would also slash even more deeply a huge safety net program.
More moderate Senate Republicans are already nervous about the House bill’s Medicaid cuts and would likely balk at cutting even more from the program.
"I want to be sure going forward that the per capita program works," Portman told reporters.
7) How much of Obamacare’s insurance regulations will they repeal, or let states waive?
The House bill allowed states to waive two of Obamacare’s insurance rules: the prohibition on health insurers charging sick people more than healthy people and the requirement that plans cover certain essential health benefits. The CBO projects that while this would lower premiums for some younger, healthier people, it would also lead to sicker people being priced out of insurance in states that sought the waivers.
Furor over that potential harm to patients with preexisting conditions is fueling activist outrage over the bill.
Senate Republicans will have to first figure out if those waivers comply with their budget rules, which are supposed to restrict the bill to spending and revenue changes. If they do comply, then senators have to decide if they want to keep the waivers, alter them, or get rid of them entirely.
Some Senate conservatives are pushing to invert the waivers: make waiving (or rather repealing) the Obamacare regulations the default nationwide, but then allow states to opt in to the rules if they want.
But other Republicans are already uncomfortable with the House waivers, particularly the eroding of protections for people with preexisting medical conditions that Obamacare provided. They would likely object to rolling back those protections even further.
“I support having the preexisting conditions [protections] as part of the Senate bill,” Sullivan told reporters this week. “No waivers.”
8) What are they willing to do to stabilize Obamacare’s markets in the next few years?
Whatever plan Senate Republicans come up with, they will likely include a transition period of a few years, to move from Obamacare to the new GOP health care system.
In the meantime, they need to make sure Obamacare’s insurance markets are stable. The Trump administration is making that difficult, by threatening to cut off crucial Obamacare subsidies that reduce out-of-pocket costs that poorer Americans have to pay for their health care. If Trump stopped the payments — which he could do by ending an ongoing lawsuit — it could cause these markets to collapse.
Senate Republicans have discussed approving the subsidies in their bill, which would eliminate the legal issue at the heart of the lawsuit and neuter Trump’s threat. They could also ask the administration to make formal assurances that the payments would continue.
But beyond that, none of the options are very appealing to them. Health plans say Obamacare’s individual mandate helps stabilize the market, so the Senate could decide to keep the law’s penalty for not purchasing insurance for a few years.
Some senators have said they’d be willing to keep policies they don’t like for a while to ensure the market’s stability. But, as with the tax repeal issue, others say Republicans have run for years on repealing provisions like the mandate. They must do it now.
9) Should they automatically enroll uninsured people into catastrophic coverage?
One idea has been floated that wasn’t raised at all in the House negotiations: automatically enrolling uninsured people in some kind of catastrophic coverage.
Sen. Lamar Alexander (R-TN), who chairs the important health committee, has suggested making auto-enrollment a condition for states that want to waive the Obamacare insurance rules, according to CNN. Thune has told reporters that he has tried to start a conversation about the concept, though the big unanswered question is how exactly it would work.
The merits, for Republicans who are interested in auto-enrollment, is it would help bring more people into the insurance pool, which could help spread costs around more and lower premiums.
It would also help cover more people — right now, many Republicans are clearly troubled by the CBO’s projection that the House bill would lead to 23 million fewer Americans having health insurance in 2026.
“We’re trying to get more covered people, who could later opt out, but obviously that changes the risk pools and hopefully brings premiums down,” Sen. John Cornyn (R-TX), the No. 2 Republican, told reporters. “I think it’s worth discussing.”
To other Republicans, this sounds like overreach — the federal government enrolling you in a health insurance plan, unless you decide to opt out. On most of these questions, moderates are the skeptical ones. Here, it’s conservatives.