Politics

Senate Obamacare Repeal Bill Largely an Entitlement Overhaul

Proposal would maintain key aspects of the 2010 health care law

From left, South Dakota Sen. John Thune, Senate Majority Leader Mitch McConnell, and Wyoming Sen. John Barrasso conduct a news conference after the Senate policy luncheons in the Capitol last week. (Tom Williams/CQ Roll Call)

A draft of the Senate counterpart legislation to overhaul the U.S. health insurance system unveiled Thursday would make drastic changes to the Medicaid program, but largely retain the existing federal tax credit structure from the 2010 health care law that helps individuals afford insurance, among other provisions. 

The proposal is part of the Republicans’ seven-year effort to gut former President Barack Obama’s signature domestic achievement. Senate GOP leadership, which has crafted the bill largely behind closed doors with virtually no public input, has faced difficulty in bridging the gap between moderate and conservative demands.

The draft would repeal the law’s individual mandate, which requires people to buy insurance or pay a yearly fine, end several existing taxes created to help pay for provisions in the 2010 health care overhaul, and remove a controversial provision in the counterpart House bill that would allow states to waive out of several of the existing law’s regulations on insurance plans.

While Republican senators have long said they would write their own legislation, many of the provisions included in Thursday’s draft mirror the House language. The nonpartisan Congressional Budget Office has said 23 million people could lose insurance coverage by 2026 under the House proposal.

The draft would also direct up to $50 billion in funding through 2021 to the Centers for Medicare and Medicaid Services that is intended to help shore up the existing individual exchange marketplace. It would also provide another $62 billion over eight years in long-term funding to states. 

The Senate proposal attempts to strike a balance between the demands of a divided GOP conference, though conservative groups are likely to decry the draft as “Obamacare-lite.”

Moderate Republicans, like Sens. Rob Portman of Ohio and Shelley Moore Capito of West Virginia, have called for a more gradual phaseout of the Medicaid expansion included in the 2010 law that allowed states to cover a higher percentage of their population in the program with an enhanced federal match.

Conservatives, including Sens. Mike Lee of Utah and Patrick J. Toomey of Pennsylvania, have sought to gut more of the regulation on insurers imposed by the law and put a stricter cap on the amount of federal dollars spent on Medicaid.

The draft would begin to roll down the law’s Medicaid expansion in 2021, and by 2024 states would be charged with paying the same portion of the entitlement program as before the 2010 law. Similar to the House, it would transform the entitlement program from an open-ended funding system to a capped model under which federal funding would be made available based upon a state’s population.

The Senate proposal would use the same yearly growth rate included in the House bill for the first several years. But in a nod to conservatives, a more strict spending limit would be imposed after 2025.

While the House legislation would tie the existing tax credit structure to age, the Senate draft would align those credits with an individual or family’s age, income and geographic location, mirroring the exact system currently in place. This was likely done to combat the negative headlines House Republicans faced after the CBO said their plan could skyrocket costs for older Americans.

Starting in 2020, the subsidies would be available for those making up to 350 percent of the federal poverty line, a reduction from the current 400 percent ceiling.

The draft also includes language that would effectively prevent individuals from using federal tax credits to purchase insurance plans that offer abortion coverage, though lobbyists say that could be removed due to Senate rules. It would also withhold funding for Planned Parenthood for one year, a provision that was under debate over the past week. 

And unlike the House bill that would allow states to apply to waive out of some existing regulations, the Senate draft would tap an existing program, known as “Section 1332” waivers, to help states achieve flexibility in their health care systems. The draft would provide $2 billion to help states with the application process. 

In a nod to insurer demands, the proposal would also fund the health care law’s so-called cost-sharing subsidies, which help reduce health care costs for lower-income people. Several major insurance companies have cited the uncertainty surrounding those payments as justification for withdrawing from the individual exchange marketplace. That provision, however, is likely to violate Senate rules and could be voted on under a 60-vote threshold. 

It remains to be seen what changes will be made to the draft before the expected vote late next week. A new CBO analysis is expected early next week and senators are expected to use that information to inform their position on the legislation.

Senate Majority Leader Mitch McConnell — who has wielded significant influence over this process despite the creation of a 13-member, all-male working group that was initially charged with writing the bill — can only afford to lose the support of two GOP members in the event a tie-breaking vote by Vice President Mike Pence is needed.

Republican leaders, including McConnell, have said there will be an open amendment process for the legislation once it reaches the Senate floor. But that will not appease Democrats, who have chastised the GOP for going to extreme lengths to keep their proposals secret, a stark difference from the process used to craft the initial health care law that was widely criticized by Republicans for being too private.

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