Senate GOP health bill to break with House on key points

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(Bloomberg) — Senate Republican leaders will unveil a closely held plan to replace Obamacare on Thursday that includes a longer transition period than a House-passed bill, though there’s no indication they have enough support for it to pass in a vote that could come as early as next week.

The plan will differ from the legislation passed in May by the House in some key ways, including a three-year phase-out of Obamacare’s Medicaid expansion beginning in 2020, according to a person familiar with the plan that was outlined to key congressional aides Wednesday night.

That’s designed to appeal to senators from states that elected to take advantage of the Medicaid expansion and didn’t want a more immediate phaseout. At the same time, the measure would provide a lower reimbursement rate for states under Medicaid.

Senate Majority Leader Mitch McConnell is gambling that he’ll be able to persuade enough lawmakers to keep his party’s campaign promise to repeal the 2010 Affordable Care Act. But many moderates and conservatives in his party say they’re not sure if they can support the legislation because they don’t know what’s in it.

“What I need in order to get to yes: I need the information, I need to hear from constituents and that’s going to take some time,” said Senator Ron Johnson of Wisconsin, a member of a working group that exchanged ideas for the measure.

More gradual transition
Republicans who attended briefings this week about the emerging proposal said the legislation envisions a more gradual transition away from Obamacare than the House-passed plan. The draft bill would effectively delay repeal of Obamacare until 2020 and allow more generous tax credits for people buying individual insurance policies, said Republican Thom Tillis of North Carolina.

“It will probably put some on my side of the aisle outside their comfort zone,” he told reporters Wednesday. “We have to look at these soft-landing strategies most importantly for the insured population but also to a secondary degree for the states so they have time to plan out their transition strategies as well.”

The proposal from GOP leaders will retain some core features of the House bill: steep cuts to Medicaid that limit its spending in future years and a ratcheting back of Obamacare’s open-ended tax subsidies.

But the differences are significant. The draft bill would restrict Medicaid’s spending to a slower growth rate than the House-passed bill. It would cap program funding at the rate of inflation starting in 2025, as opposed to the higher rate of medical inflation plus 1 percentage point used in the House bill.

The proposal would continue to provide cost-sharing subsidies to insurers to cover costs of low-income Americans taking part in Obamacare’s insurance exchanges at least through 2019, according to the person familiar with the details, while the House bill didn’t.

Tax credits provided in the measure would be based on both income and age. The House bill based them solely on age.

Essential health benefits
As in the House bill, states could receive waivers of some of Obamacare’s consumer protections including provision of “essential health benefits.” However, unlike the House bill, they couldn’t waive them for people with pre-existing health conditions.

On abortion, the Senate bill, like the House bill, would ban funding for Planned Parenthood for one year. However, the measure won’t include abortion restrictions on the tax credits used in the insurance exchanges after the Senate parliamentarian ruled against their inclusion. Senate leaders are trying to work out an alternative approach.

The measure would eliminate Obamacare’s tax increases, including a 3.8% net investment income tax, a 2.3% levy on medical device sales, a 0.9% Medicare surtax and a 10% indoor tanning tax.

But a tax on expensive “Cadillac” employer-provided plans would be delayed, as in the House measure.

‘Discussion draft’
McConnell of Kentucky said Wednesday that a “discussion draft” of the healthcare measure will be released online Thursday. The No. 2 Senate Republican, John Cornyn of Texas, said the Congressional Budget Office will probably release its estimate of the bill on Monday, although he said he’s hoping it could be as early as Friday.

The Senate may vote next week, McConnell said Tuesday, adding that Republicans will make “every effort to pass a bill that dramatically changes the current healthcare law.”

McConnell has defended the secretive process of drafting the bill, in which few people besides him and some top-level Republican aides have been aware of the contents.

“I do find it particularly laughable the complaints about process,” he said Tuesday. McConnell said final details of Obamacare were worked out in then-Majority Leader Harry Reid’s office as he struggled to get enough Democrats to back it. Still, the Obamacare proposal had undergone multiple committee hearings before that final stage, unlike the Senate Republicans’ emerging plan.

Anthem pulling back
Senate Republicans are unveiling their plan at a critical time for Obamacare’s insurance exchanges, where consumers can purchase individual coverage. Wednesday is the deadline for health insurers to decide whether they’ll participate in the Obamacare marketplace next year.

Anthem Inc., one of the last large multistate insurers that hadn’t significantly pulled back from the market, announced Wednesday it’s pulling individual plans from most insurance markets in Wisconsin and Indiana next year. The insurer blamed “continual changes and uncertainty in federal operations, rules and guidance, including cost sharing reduction subsidies.”

Conservative Republican senators sounded a skeptical note about McConnell’s emerging plan, which could suggest that the 50 votes needed to pass the measure may be elusive.

Rand Paul of Kentucky said he’s very concerned that the Senate bill would include more subsidies for insurance than the House version.

“All of this discussion sounds to me like the federal government micromanaging and buying insurance for people,” he told reporters. “The insurance companies make $15 billion a year in profit. I’m not for giving the insurance companies any money.”

Asked whether he’ll vote no, Paul said he wants to start over and repeal Obamacare.

Paul and Republican Susan Collins of Maine confirmed that the tax credits for healthcare coverage in the Senate bill will be adjusted for income, and not be just based on age, as in the House bill.

“I think it is going to be more generous in certain ways,” Collins said. “I don’t know whether the tax credit will phase out slowly over time over income levels, or whether it’s going to be abrupt cliffs, which is a major problem we had with” Obamacare.

McConnell’s closed-door approach and his call Tuesday for rapid action drew fire from members of his own party, including Lisa Murkowski of Alaska, Mike Lee of Utah and Rob Portman of Ohio.

Republicans control the Senate 52-48 and plan to use an expedited procedure to pass a health plan with as few as 50 votes, plus a tie-breaker from Vice President Mike Pence. That means McConnell can afford to lose no more than two Republicans in order to pass a bill, which is opposed by all Democrats and the chamber’s two independents.

“We’re going to make clear what this means for people’s lives,” Democratic Senator Ron Wyden of Oregon told CNN on Thursday. Wyden hasn’t yet seen the bill but said that, based on the House bill, he believes it is likely to reduce healthcare benefits while delivering “hundreds of billions of dollars to the very fortunate” in tax cuts.

Senate Minority Leader Chuck Schumer criticized the secret bill-drafting process as “reckless” in a Senate floor speech Wednesday.

“They are ashamed of their bill,” the New York Democrat said. “They don’t want the American people to see that their healthcare bill is little more than a vehicle to give another tax cut to the wealthy.”

The House measure would cut Medicaid by $834 billion over a decade, repeal $664 billion of Obamacare’s tax increases on the wealthy and the healthcare industry, and end requirements that individuals get health insurance and that most employers provide it.

The nonpartisan CBO says the House bill would cause 23 million more Americans to be without health insurance by 2026. A May 16-22 Kaiser Family Foundation poll said 55% of Americans have an unfavorable view the bill, H.R. 1628.

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