(Bloomberg) — Senate Majority Leader Mitch McConnell is taking a risk by calling for a bipartisan health care plan if the Republican-only Affordable Care Act change bill fails: While his comments may encourage conservatives to fall in line with his approach, party moderates may be emboldened to abandon the GOP legislation.

McConnell told a home-state Kentucky audience Thursday that if Republicans can’t “agree on an adequate replacement, then some kind of action with regard to the private health insurance market must occur.”

(Related: New ACA Risk Report Hits Some Health Insurers With Huge Bills)

His remarks to a Rotary Club luncheon in Glasgow could serve as a warning to holdout conservative Republicans most ideologically opposed to Obamacare — but also may give wavering moderates cover to oppose the GOP plan, which combines tax cuts and deep reductions in health spending.

Republicans can’t leave the Affordable Care Act untouched, as insurers are pulling out of some areas, but prospects of a dramatic rewrite are dimming under the party’s wafer-thin 52-48 majority, analysts said. Republican leaders can lose no more than two votes in their party amid united Democratic opposition.

“It’s what you might call bipartisanship at gunpoint,” said Ross Baker, a political scientist at Rutgers University in New Brunswick, New Jersey. “Republicans have to do something. They can’t do nothing. It is clear that McConnell with all of the legerdemain of a veteran magician has not been able to put together 50.”

McConnell was forced to delay action on the measure last week after about half a dozen Republicans objected. He has spent the July 4 recess studying possible revisions that might win support of holdouts once he unveils a new plan as early as the week of July 17. Republican leaders have indicated they want to move on to other issues, including a tax-code overhaul, if they can’t agree on a health bill before a month-long August break.

The conservative group Heritage Action urged Republicans Friday to stick with their promise to repeal the Affordable Care Act. Working with Democrats “will be catastrophic for the party,” which for seven years has pledged “it is the party of repeal,” Michael Needham, Heritage Action’s chief executive officer, said in a statement.

Needham warned that bipartisan legislation “would embolden Republican moderates as they continue to hold out in attempt to keep as much of Obamacare on the books as possible.”

Senate Democratic leaders have said they would be willing to consider a measure that would bolster the Affordable Care Act public health insurance exchange programs, which have been buffeted by decisions by top insurers to exit the market in regions of Iowa, Missouri, North Dakota and many other states.

(Related: H.R. 1628 Chaos Raises Odds for ACA Survival)

Democrats have accused President Donald Trump of injecting uncertainty in those markets by not providing clear support for the Affordable Care Act public exchange plan cost-sharing subsidies that help lower-income people buy individual coverage on the exchanges.

Schumer’s Response

Senate Minority Leader Chuck Schumer treated McConnell’s remarks as a breakthrough.

“As we’ve said time and time again, Democrats are eager to work with Republicans to stabilize the markets and improve the law,” Schumer said in a statement Thursday. “At the top of the list should be ensuring cost-sharing payments are permanent, which will protect health care for millions.”

Don Stewart, a spokesman for McConnell, said the reaction was overblown because McConnell had said last week after a White House meeting that Republicans may “have to sit down with Senator Schumer” on a pared-back bill if the GOP-only effort dies.

Sen. Mike Lee, R-Utah (Photo: Lee)

Sen. Mike Lee, R-Utah (Photo: Lee)

Since the House passed the American Health Care Act bill, its version of an Affordable Care Act change bill, in May, Senate Republicans, including John Thune of South Dakota and Ron Johnson of Wisconsin, have said that they would seek a Plan B if the Republican bill stalls in their chamber. The effort to pass a Senate bill grew tougher after the nonpartisan Congressional Budget Office said last month that an initial proposal by McConnell, the Better Care Reconciliation Act bill, would cause 22 million Americans to lose insurance by 2026.

There is already broad support among Republicans to shore up the exchanges, reflected in McConnell’s bill. It includes $50 billion over four years to bolster insurance markets, in addition to added cost-sharing subsidies. It also includes a state innovation pool of $62 billion over eight years that would allow funding for high-risk pools, reinsurance and other items.

Possible Revisions

A Senate GOP aide said that a revised bill is likely to boost proposed spending to further stabilize premium costs in the Affordable Care Act public exchange program.

McConnell is considering additional changes designed to attract more Republican support for the effort. That will likely include revisions to Medicaid after talks among Republican senators about the varying needs of their home-state Medicaid beneficiaries, the Republican aide said.

While no final decisions have been made, Republican leaders are considering axing plans to repeal nearly all of the tax increases that help finance the Affordable Care Act, said the GOP aide. Tax cuts that could be removed from the GOP health bill include a repeal of a 3.8% investment tax on high-income earners, and a Medicare earned income surcharge on the wealthy.

Those two tax increases generate nearly $231 billion in revenue over a decade, according to the Joint Committee on Taxation, so leaving them in place could create budget wiggle room for Medicaid or other health expenditures demanded by holdout moderate Republicans.

Cruz Proposal

Republican leaders are weighing a proposal by Sen. Ted Cruz, a Texas Republican, that could help lure his backing and that of other conservatives like Mike Lee of Utah. It would allow the sale of cheap, unregulated, limited-benefit health plans by insurers who also offer plans through the state Affordable Care Act exchange programs that meet all of its requirements, such as covering “essential health benefits” like maternity care.

Critics say that would give healthy people an incentive to leave the exchanges, pushing premiums dramatically higher for those who remain. Republican leaders are considering a companion exchange stabilization proposal to offset some of that potential effect, the GOP aide said.

Trump complicated McConnell’s negotiations with conservatives late last month, tweeting that if Republican senators can’t strike a deal, they should simply repeal Obamacare and replace it later. That’s a reversal of Trump’s earlier position and could give conservatives a reason to oppose McConnell’s bill.

Tougher yet is the public’s reaction to the Senate GOP plan. Just 12% of Americans support the Senate’s Better Care Reconciliation Act bill, according to a June 24-27 poll of 1,000 registered voters by USA Today and the Suffolk University Poll. A full 53% of respondents said Congress should leave Obamacare alone or address its problems while leaving its framework intact.

One wrinkle is that many of the people who talk about ‘Obamacare” fail to define how they use that term. The term can refer to all of the provisions of the Patient Protection and Affordable Care Act of 2010, and all of the health-related provisions of the Health Care and Education Reconciliation Act of 2010. In other cases, it may refer only to the tax and penalty provisions in the Affordable Care Act, and some or all of the provisions in the act that relate to commercial health insurance.

— Read What the Senate Health Care Fight Means for Advisors on ThinkAdvisor

 

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