Republican health bill draft may be destined for a rewrite

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(Bloomberg) — Senate Majority Leader Mitch McConnell’s latest healthcare draft almost certainly is headed to a rewrite again to find a way to appease the handful of Republican moderates worried about Medicaid cuts in their states.

The bill already has drawn two firm no votes -- Rand Paul of Kentucky and Susan Collins of Maine -- leaving McConnell no margin for losing Republican support to get the 50 votes he needs as senators await a Congressional Budget Office analysis expected early next week.

Other than Paul, who wants a full repeal of Obamacare, McConnell mostly shored up his conservative base Thursday, handing them a version of an amendment by Texas Senator Ted Cruz that allows insurers to sell skimpier plans and bar people with pre-existing conditions.

But moderates who wanted far more money for Medicaid or to boost subsidies for the poor got few concessions. McConnell did add $70 billion to state stability and innovation funds -- and even effectively earmarked some of them to the key state of Alaska in one provision -- but that’s a far cry from what several Republican senators sought.

Senators who have yet to commit to the bill include Lisa Murkowski of Alaska, Dean Heller of Nevada, Rob Portman of Ohio and Shelley Moore Capito of West Virginia -- all four of whom represent states that expanded Medicaid under the Affordable Care Act.

Awaiting CBO
“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.

“After all of these years of suffering thru ObamaCare, Republican Senators must come through as they have promised!” President Donald Trump, who has been in Paris for bilateral meetings with French President Emmanuel Macron, tweeted Friday. “I will be at my desk, pen in hand!” Trump said in another message. He returns later Friday to spend the weekend at his golf resort in Bedminster, New Jersey.

So far, moderates have been privately frustrated that McConnell has stuck to his guns on both slowing the growth of Medicaid and winding down the federal share of the expansion cost. Other senators, including Murkowski, have worried about the bill’s far skimpier subsidies for many poorer people now on the Affordable Care Act exchanges.

In the latest draft, McConnell added $70 billion to stabilize insurance exchanges on top of $112 billion for the same purpose in an earlier measure that stalled out two weeks ago. To get more Republican on board, McConnell’s may have to commit more of the money now allocated to deficit reduction.

Cruz amendment
The moderates’ concerns could be compounded by the Cruz amendment, given insurers and critics’ contention that it will cause premiums to soar for the sicker people who would still remain in the Affordable Care Act exchanges.

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.

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

Call for debate
Republican Senator 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.

Johnson said he expects some of the remaining deficit reduction in the bill to be spent, though he would prefer to shrink the budget gap.

“With the added deficit reduction we have, there’s more room to maneuver, and my guess is they’ll use that to maneuver,” he said.

Republican Senators Lindsey Graham of South Carolina and Bill Cassidy of Louisiana on Thursday morning released their own alternative health plan that would shift much of current federal funding for Obamacare insurance 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.

‘Well received’
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.

The new measure discards earlier plans to repeal three Obamacare taxes on the wealthy, including 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, according to the summary. That move, a nod to moderates, 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.

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.

Subsidy threshold
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.

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.

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. Senator 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.

Bloomberg News