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Republicans Have No Margin for Defections in Senate Health Bill

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(Bloomberg) — Two Republican senators immediately rejected the party’s latest version of the Better Care Reconciliation Act health care bill Thursday, leaving the party no margin for additional defections as Majority Leader Mitch McConnell seeks a vote next week to change the Affordable Care Act.

Several holdouts the bill was designed to win over, including Rob Portman of Ohio, remain undecided and say they’re waiting to see an analysis of the measure’s impact by the nonpartisan Congressional Budget office, due next week.

(Related: Collins and Cassidy Unveil Partial ACA Repeal Bill)

“I’ll review the text of this new legislation just like I did the last version, & I will review the CBO analysis,” Portman wrote on Twitter.

Because of the GOP’s narrow 52-48 majority, Republican leaders can lose no more than two votes in their party amid united Democratic opposition to efforts to repeal Obamacare.

In the new version released Thursday, McConnell added $70 billion to stabilize insurance exchanges on top of $112 billion for the same purpose in an earlier measure. McConnell of Kentucky hopes the modified bill will revive prospects for the embattled Affordable Care Act change effort, which stalled two weeks ago.

But Sens. Susan Collins of Maine and Rand Paul of Kentucky already say they’ll vote no. Collins, a moderate, said she opposed the new measure because its cuts to Medicaid were too severe. Paul, a conservative who says he prefers a full repeal of Obamacare, announced his opposition on Wednesday and stood by his position after the bill was released.

Affordable Care Act Taxes

The new measure discards earlier plans to repeal three Affordable Care Act taxes on the wealthy, according to the summary. That move freed up about $230 billion in cash to bolster health expenditures.

The revised bill also would allow people for the first time to use health savings accounts to pay insurance premiums, according to the document.

John Thune of South Dakota, the No. 3 Senate Republican, said leaders plan to hold a key procedural vote in the middle of next week.

Separately, more than half a dozen Republican and Democratic senators have discussed alternatives to the GOP plan, which was developed without consulting Democrats.

Republican Sens. Lindsey Graham of South Carolina and Bill Cassidy of Louisiana on Thursday morning released a summary of their own alternative health plan that would shift much of current federal funding for the Affordable Care Act insurance subsidy programs and future funding directly to states, according to a statement from Graham’s office. Cassidy said he wants to offer his plan as an amendment to McConnell’s bill.

But Graham also suggested he wouldn’t try to block the McConnell version.

“It’s definitely better. It was well-received,” he told reporters after coming out of a closed-door GOP meeting.

Appeal to Moderates

The changes include provisions intended to appeal to moderates worried about premium spikes predicted by the CBO and others under the previous bill.

But while the bill omits a series of tax cuts for the wealthy in a nod to moderates, conservatives get major changes legalizing far skimpier plans that aren’t part of the Affordable Care Act exchanges.

Republican Sen. Ron Johnson of Wisconsin, who had opposed plans to advance an earlier version of the bill in late June, said Thursday that he will support debating the current bill, although he isn’t ready to give his full backing.

The new plan provides billions of dollars in subsidies to assuage moderates’ fears of higher premiums for poorer, older, sicker people. Many have been skeptical or opposed to the idea of creating bare-bones plans that could siphon off healthy, young people and therefore cause premiums to rise in the exchanges. But, overall, the bill still has far less money going into Medicaid and health subsidies than the Affordable Care Act.

The revised draft would keep the earlier bill’s language allowing people earning up to 350% of the poverty level to receive subsidies. And it would keep a skimpier benchmark for subsidies than the Affordable Care Act’s silver plan, which would result in higher out-of-pocket expenses.

The new plan would also allow people to purchase a high-deductible catastrophic-coverage plan with federal tax credits, and prohibit plans eligible for tax credits from providing abortion coverage except in cases of rape or incest or to save the life of the mother.

Covering the Sick

The revised bill includes a federal fund that would pay health insurers to cover costs of sicker people seeking individual coverage on the insurance exchanges.

To qualify for the funds, insurers would have to meet minimum coverage standards in the exchange, while also offering coverage off the exchange that meets state requirements. Those buying state-governed plans wouldn’t be allowed to use federal tax credits to buy their coverage but could tap tax-advantaged health savings accounts to cover the costs.

To appeal to lawmakers in high cost states like Alaska, 1% of expanded state innovation and stability grants would be reserved specifically to subsidize insurance in states where premiums are at least 75% higher than the national average.

Starting in 2022, states would have to share in the costs of those funds with their own money, with states having to shoulder 35% of the burden in 2026.

Sen. Marco Rubio, R-Fla. (Photo: Rubio)

Sen. Marco Rubio, R-Fla. (Photo: Rubio)

The bill changes the calculation for determining Medicaid payments to hospitals to assist with uncompensated care that is expected to more accurately allot the funds based on a state’s uninsured population instead of Medicaid enrollment as the original legislation did. Sen. Marco Rubio, a Florida Republican, tweeted Wednesday that one of his priorities for changing the bill involved increasing those funds for hospitals in his state.

Basic Plans

Republican leaders included a version of an amendment proposed by Republican Sen. Ted Cruz of Texas and GOP Senator Mike Lee of Utah.

Cruz and Lee want to allow insurers to offer cheap, bare-bones plans alongside those that meet the more comprehensive coverage requirements of the Affordable Care Act. Critics in both parties say the proposal would essentially put people with pre-existing conditions in the Affordable Care Act insurance pool and allow young, healthy people to buy cheaper plans in a separate pool.

Cruz said he supports the new measure though that may change if his amendment is eliminated. He said he would have preferred a full repeal, but it wouldn’t have the votes.

“I think we’re making significant progress,” Cruz said Thursday.

The Blues and AHIP Oppose the Cruz Plan

But health insurers have said the plan Cruz backs would destabilize the insurance market and undermine protections for sick people. The BlueCross BlueShield Association called the Cruz plan “unworkable.”

America’s Health Insurance Plans, the industry’s main lobbying group, said his proposal would hurt the market by dividing healthy and sick people into separate groups. The sick people, AHIP said, would face extraordinarily high premiums, or might not be able to find coverage.

‘Like the Old Bill’

Paul, a Tea Party stalwart, said Wednesday, “The new bill looks a lot like the old bill except it spends more money, taxes more and does little to assuage the concerns of conservatives.”

In an effort to gain support with more health funding, Republican leaders chose to retain several Affordable Care Act tax increases, a reversal from the earlier measure. That includes the Affordable Care Act’s 3.8% tax on net investment income for people who earn more than $200,000 and couples with incomes over $250,000, as well as a 0.9% Medicare surtax on the same incomes.

The plan also scraps a tax break for health-insurance executives’ pay, keeping an Affordable Care Act provision allowing health insurance companies to deduct from their taxes $500,000 of the pay of each top official. That’s a tougher restriction than the limit imposed on other companies, which is $1 million per executive. The three tax items produce a revenue stream of nearly $232 billion over a decade.

—With assistance from Zachary Tracer, Anna Edney and Terrence Dopp.

— Read 3 Reasons Congress Could Approve an ACA Change Bill (With Video) on ThinkAdvisor.

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