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Congress prepares to do the bare minimum to stabilize Obamacare

Political realities will likely keep any package very small.

Lamar Alexander and Patty Murray
Sens. Patty Murray (D-WA) and Lamar Alexander (R-TN)
Chip Somodevilla / Getty Images
Dylan Scott covers health care for Vox. He has reported on health policy for more than 10 years, writing for Governing magazine, Talking Points Memo and STAT before joining Vox in 2017.

The prospects for even the smallest bipartisan cooperation on Obamacare in the aftermath of the failed GOP bid to repeal and replace it are about to be thoroughly tested.

The realistic list of fixes for the law has shrunk dramatically. The final package isn’t likely to contain much: just payments to insurers that help cover reduced out-of-pocket costs for lower-income Americans and some additional state flexibility under a waiver program set up under Obamacare.

That could really be it — and that modest package wouldn’t even be assured of passage.

The first test will begin this week, when the Senate health committee holds two hearings with governors and state insurance commissioners on what they’d like to see done to improve the Obamacare markets. Some of the governors have prepared a much more robust proposal for stabilizing Obamacare, but at the moment this is likely to be at best a long-term project or at worst a pipe dream.

There is simply no appetite for a grand Obamacare fix, particularly among Republicans, after seven years of fierce debate over the health care law that culminated in the dramatic failure by the GOP Congress to repeal it over the summer. Republicans are still licking their wounds; they aren’t quite ready for an about-face to repair a law they worked so hard to end.

So the plausible universe of Obamacare fixes, at least for this month, has dwindled to the bare minimum.

“Congress would be deluding themselves if they think this limited action will cause [health] plans to change their approach for 2018,” one insurance lobbyist told me.

But it may be all that is possible right now. First, Republicans and Democrats have to stand down from a fight they’ve been engaged in for the better part of a decade.

Only a few of Obamacare fixes seem even possible

Obamacare is no longer in the throes of an existential crisis. Every county in the US has at least one insurance plan available on the exchanges, where people who buy insurance individually get coverage. But it is still in a precarious position, particularly regarding key payments to health plans.

The Affordable Care Act required insurers to offer low copays and deductibles to low-income people buying insurance on the exchanges. Through subsidies, known as cost-sharing reductions, the federal government helps insurers offset these cuts.

Trump has repeatedly threatened to cut off the law’s cost-sharing reductions payments, which insurers have signaled could lead to a 20 percent spike in premiums. Shoring up the insurance marketplaces starts with a reassurance to insurers that the payments will be made. (Trump can cut off the payments because of an ongoing lawsuit over whether Congress must authorize the funding, and congressional action would remove that threat.)

There is bipartisan support for funding the payments. Still, Republicans will want something in return. Funding the payments is, after all, taking a proactive step to stabilize a law they just spent seven months trying to repeal.

Republicans’ wish list starts with Obamacare’s 1332 waivers. The law created the waiver program to allow states to pursue their own health care programs as additions or alternatives to Obamacare’s policies. Those programs, though, still have to meet some requirements — they can’t increase costs or lead to fewer people having coverage.

Republicans sought to scale back some of the requirements and expedite the waiver process in their repeal-and-replace crusade. That is a starting point for what they want in exchange for funding the cost-sharing reductions.

But even those narrow negotiations are risky. Republicans seem unwilling to fund the payments beyond 2018 — both for political reasons (it’s difficult to ask rank-and-file Republicans to fund an Obamacare program in perpetuity) and because they don’t believe the payments should be a permanent fixture of the health care system.

As for waivers, Republicans had grander ambitions in their repeal quest — namely, allowing states to waive Obamacare’s requirement that health plans cover certain essential health benefits. But Democrats are going to be insistent on maintaining those requirements, which might not leave many options except for streamlining the process. That might not be enough for Republicans.

“I don't think anything else is in play, and I'm not even sure if they can manage those two issues,” a Republican health care lobbyist told me. “Democrats think they have a winning hand on CSRs and don't seem willing to give on any of the substantive hurdles/guardrails in 1332, and I don't think Republicans are going to accept simply easing the 1332 procedural requirements without any changes to the substance.”

Democrats would be willing to consider more robust changes, like creating a reinsurance program to help compensate insurers for high-cost patients or some kind of stability fund to let states decide how best to stabilize their markets. Those ideas have some bipartisan support from governors, including some of the ones testifying at this week’s hearings.

But those ideas likely have insurmountable political and policy challenges. Republicans will be reluctant enough to fund cost-sharing reductions; any additional money supporting Obamacare will be a tough sell. In addition, under the Senate rules, any new funding would have to be offset somehow, by funding cuts elsewhere or tax increases.

With just a few weeks to work with, Republicans believe any bigger ideas would complicate the issue too much and sink the possibility of even such a bare-minimum package passing. Democrats are certainly ready to blame the lack of more ambitious action on an inability of Republicans to marshal their own conference to take more substantive steps to shore up the marketplace.

The Obamacare clock is ticking and the legislative path is tricky

Right now, the deadline to finalize Obamacare plans for 2018 is September 27. So there is a limited window to do anything to stabilize the markets for next year.

Weighing heavily on the minds of lawmakers and aides is that several plans decided at the last minute last year to drop out of Obamacare’s markets. Passing something, even a very modest package, could help avoid that. That’s about as stabilizing as the bill can really hope to be, given how small the scope of the actual policies under discussion.

If an agreement can be reached, things could move quickly. Legislative text and scoring by the Congressional Budget Office should actually be pretty simple.

“The actual drafting and scoring is not the insurmountable task,” a senior Democratic aide said earlier this month. “I think those things can occur quickly.”

Then the question becomes how to actually pass the package. Passing it as a standalone bill seems like the least likely option. Not only is Obamacare still politically sensitive on its own, but the month is already stocked with pressing and explosive issues: Funding the government beyond September and raising the federal debt limit chief among them. Some kind of relief package for Hurricane Harvey is also likely in the mix.

So attaching the Obamacare fixes to an already-moving vehicle is seen as far more likely by lobbyists and aides, should a package be agreed upon. That would address the calendar problem and simultaneously minimize the risk of political grandstanding over the law — and possibly the threat of a Trump veto, which is being treated as real.

One possibility, aside from the government funding and debt limit bills, would be the extension of the Children’s Health Insurance Program that is needed before the end of the month. The Wall Street Journal reported some Obamacare provisions could be added to the legislation.

Sens. Lamar Alexander (R-TN) and Patty Murray (D-WA) — the lead Republican and Democrat working on the proposal — have a track record of bipartisan breakthroughs. They most recently helped negotiate a bill last year with reforms to the Food and Drug Administration, which also included billions of dollars in medical research and public health funding. They are among the most proven dealmakers on Capitol Hill.

But skepticism runs deep across Washington. Obamacare is still politically volatile. Trump’s veto pen is a real problem. There is little hope for adding any substantial funding to the marketplace. And the schedule for September is already packed and treacherous.

“Honestly this whole thing is a joke,” another GOP lobbyist told me. “No money. No floor time and even less than any administration interest.”

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