(Bloomberg) — Senate Republican leaders issued a long-awaited Affordable Care Act change proposal aimed at winning over both the moderate and conservative wings of their party, but their draft bill was immediately opposed by a group of four GOP senators.
Sen. Rand Paul of Kentucky said he and three other conservative Republicans — Ted Cruz of Texas, Ron Johnson of Wisconsin and Mike Lee of Utah — oppose the version released Thursday and intend to negotiate as a team to improve it. Their opposition could threaten passage of the bill. For the measure to clear the Senate, Republicans can only afford to lose two GOP votes amid unanimous Democratic opposition.
The draft “Better Care Reconciliation Act of 2017” bill includes sharp cuts to Medicaid for the poor and disabled, more modest trims to other Affordable Care Act subsidies and tax cuts for the wealthy that were included in a version passed by the House.
Labeled a “discussion draft,” the plan would provide an additional $50 billion over four years to stabilize insurance exchanges, relying on a mechanism Republicans have criticized in the past as a way to keep insurers in the marketplace.
It largely resembles the House bill passed last month, including the tax cuts for wealthy people, drugmakers and insurance companies. The Senate bill’s initial Medicaid cuts are more gradual than the House, though both end the open-ended funding of the health care system for the poor.
The plan, a product of months of closed-door meetings, includes $15 billion a year in market-stabilizing funds over the next two years and $10 billion a year in 2020 and 2021. These payments would come in addition to cost-sharing subsidy payments, which would be extended through 2019.
“Perhaps the discussion will begin in earnest to make the bill better,” Paul told reporters. “I think you only get changes if you show you have the power to, you know, not vote for the current bill.”
Cruz gave flyers to fellow Republicans with his demands: letting states design coverage without getting a federal waiver, allowing consumers to buy insurance across state lines, and allowing insurers that meet federal mandates to also sell other plans that don’t comply.
Senate Majority Leader Mitch McConnell of Kentucky has previously said he wants the full chamber to vote on the measure next week. Second-ranking Senate Republican John Cornyn of Texas said leaders want votes on multiple amendments starting June 29, with final passage of the bill early the next morning.
The bill will “ultimately transition away from Obamacare’s collapsing system entirely so more Americans won’t be hurt,” McConnell said Thursday on the Senate floor.
But holding a vote next week would be potentially risky for Republican leaders.
“I don’t see how I can get the information I need to get to yes in a week,” Johnson told reporters Thursday.
Plan With ‘Heart’
President Donald Trump said Thursday the Republican plan will have “heart.” “It’s going to be great,” he said at an unrelated event at the White House.
Former President Barack Obama, whose health law was his biggest domestic achievement, said on Facebook the GOP plan “is not a health care bill. It’s a massive transfer of wealth from middle-class and poor families to the richest people in America.”
Obama urged people to contact their representatives to demand that lawmakers seek a compromise to improve Obamacare. “Small tweaks” to the GOP bill “cannot change the fundamental meanness at the core of this legislation,” he said.
Health stocks rose to highs on Thursday, following the bill’s release. The Standard and Poor’s 500 Health Care Index of drugmakers, insurers, hospitals, medical suppliers and other health companies closed at an all-time high, up 1.1%. Hospitals, which would face more gradual cuts to Medicaid under the Senate bill than the House version, were some of the biggest gainers. Shares of Community Health Systems Inc. closed up 5.1% to $9.27, while Tenet Healthcare Corp. gained 6.9% to $18.90.
Sen. Rob Portman, R-Ohio (Photo: Senate)
The plan mostly affects two groups of people: the roughly 72 million whose care is covered through Medicaid, and another 20 million or so who buy insurance in the individual market.
The Senate version phases out the Affordable Care Act expansion of Medicaid over three years through 2023, rather than in 2020 under the House bill. But in 2025, the Senate bill moves to more severe funding caps for the federal contribution to Medicaid, using the consumer price index, rather than a measure of medical inflation that tends to rise more quickly.
In the individual market, the Senate bill has a subsidy system similar to the Affordable Care Act, though less generous. The subsidies would be based on the cost of a low-level bronze plan, rather than a silver plan. Silver plans have an average deductible of about $3,500, while the average for bronze plans is about $6,000, according to HealthPocket Inc., which compares health plans.
That means individuals either must pay more to get the same health insurance they had before, or end up with less generous health plans with higher deductibles. The bill would provide subsidies for people making up to 350% of the poverty level, rather than the 400% cutoff in the Affordable Care Act premium tax credit subsidy program.
Several Republicans are still skeptical of the measure, which may undergo significant changes before a Senate floor vote.
‘A Number of Concerns’
Republican Sen. Susan Collins of Maine “has a number of concerns,” spokeswoman Annie Clark said in a statement. They include the upcoming Congressional Budget Office analysis of many people would have insurance coverage, the effect on insurance premiums and changes in Medicaid, Clark said.
GOP Sen. Rob Portman of Ohio said in a statement he has “real concerns” about the measure’s Medicaid policies.
The draft bill would provide $62 billion allocated over eight years to a state innovation fund, which can be used for coverage for high-risk patients, reinsurance and other items. The draft bill would phase out Obamacare’s expansion of Medicaid over three years, starting in 2021.
Among the Affordable Care Act tax increases that would be repealed are a 3.8% investment income tax and a 0.9% Medicare surtax. The measure would delay the so-called Cadillac tax on high-cost plans from 2020 to 2026.
The subsidies are somewhat more generous for younger people and those with lower incomes. A young person making 250% of the poverty level, though, would pay 4.3% of income for a health plan, down from 8.2% in the Affordable Care Act. Older people with higher incomes could be required to pay as much as 16.2% of their income for health insurance, compared with a 9.7% cap under the Affordable Care Act rules.
To be eligible for tax credits, plans couldn’t cover abortion costs unless the procedure is to save the life of the mother or in cases of rape or incest.
Like the House bill, the Senate version effectively ends the employer and individual mandates to buy health insurance. Republicans released a summary of the draft measure.
Republican Sen. James Inhofe of Oklahoma said Thursday that the bill has his support.
“It does, but it’s just a starting point,” he said.
Senate Minority Leader Chuck Schumer of New York said the bill is “heartless” and “may be meaner” than the House version.
“This bill will result in higher costs, less care, and millions of Americans will lose their health insurance, particularly through Medicaid,” Schumer said on the Senate floor. “It seems designed to slash support for health care programs in order to give tax breaks to the very wealthy.”
The plan would make fewer people who are legally present in the U.S. eligible for insurance subsidies by eliminating them for many temporary residents and visa holders.
It also would defund Planned Parenthood for a year. Alaska Republican Lisa Murkowski, a supporter of the reproductive care organization, said, “We’re going to start drafting up amendments and if I need to draft one on Planned Parenthood, that will be one that we will include in the mix.”
The draft bill does not, as of yet, include a provision to penalize people who don’t maintain coverage continuously, senior GOP Senate staff said. Drafters are meeting with the CBO and Senate parliamentarian to determine whether they can include such a provision, staff said. The House bill allows insurers to charge people more for coverage if they are uninsured for 63 days in a year before signing up.
The legislation is expected to result in millions of people losing insurance when evaluated by the CBO — an estimate the nonpartisan office said it aims to release early next week. The CBO said the House-passed bill would result in 23 million fewer people with insurance by 2026.
Republicans plan to use a mechanism allowing the bill to pass the Senate with only 50 votes, plus the support of Vice President Mike Pence. A Senate-passed bill would go to the House, which could either approve the Senate version and sending it to Trump’s desk or negotiate a compromise version, which would then have to pass both chambers.
—With assistance from Anna Edney, Toluse Olorunnipa, Sahil Kapur and Erik Wasson.
— Read Shut Out by House GOP, Industry Pins Health Bill Hopes on Senateon ThinkAdvisor.