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U.S. Senate Attempts to Draft Health Care Reform

President Donald Trump and many of the Republicans who now constitute the majorities in the U.S. House of Representatives and Senate were swept into office on the promise that they would repeal the Affordable Care Act—more commonly referred to as Obamacare—and replace it with a program that would lower premiums while still offering coverage for the broad majority of Americans. 

There have been a number of successes and missteps on the road to fulfillment of this promise.  In March of this year, House Speaker Paul Ryan introduced the American Health Care Act or AHCA. This bill would have abolished key components of ACA like the employer and individual mandates that require individuals and businesses to obtain health coverage or pay a financial penalty.  It would also have stopped funding the Medicaid expansion, forcing states to limit enrollment.

After a disastrous score from the Congressional Budget Office that estimated AHCA would strip 24 million Americans of health insurance within ten years, House leadership scrapped plans to bring the bill to the House floor for a vote. The bill in that form could not secure support from more conservative and moderate factions of the House that were necessary for successful passage.

However, in the following weeks, various House members amended the original American Health Care Act. Unlike the original version, the new bill allowed states to opt out of the “community rating”, which bars insurers from denying coverage to people with pre-existing conditions.  The revised bill also allowed insurers to determine rates based on age, i.e. charging older enrollees more than younger, healthier ones.

On May 4, 2017, the House voted 217 to 213 in favor of passing the American Health Care Act.  At this point, it is now up to the U.S. Senate to take up the House bill or design its own version of health care reform.

Senate Takes Charge

Following the erratic road to passage in the House of Representatives, the U.S. Senate is eager to avoid similar political mistakes, but there are a number of challenges that will make success difficult. First of all, the nature of the Senate makes unity—even among party members—considerably more problematic. Unlike the House of Representatives which is more willing to cohere into factions, members of the Senate are much more independent.  They have longer terms and are more concerned about securing broad support across their state electorate.

The wildly different personalities and political ideologies among Republican Senators is a tough obstacle.  This has created rifts among members who are more fiscally conservative like Ted Cruz and Mike Lee who deeply oppose Obamacare because it is an entitlement that adds to the nation’s debt, and more centrist Republicans like Shelley Moore who are committed to keeping key parts of the Affordable Care Act including the Medicaid expansion and the community rating.

Unfortunately, the GOP only has a 52 member majority in the Senate.  For a normal vote, a 60 member majority is needed for bill passage, but the Republicans are likely to use a procedural rule called “reconciliation” that would allow a simple majority of 51 votes for passage.  However, to use this rule, the new health care reform bill must be deficit neutral; in other words, it cannot add to the national deficit.

That is not a significant problem, however.  The Congressional Budget Office recently released their score of the revised American Health Care Act and, although the new proposal would remove health coverage from 23 million Americans over ten years, it would save $119 billion over that period.  Even if the Senate does not copy the entire House bill, it has a model for saving money that it may draw upon.

In the most recent updates, Senate Republicans have kept their prospective bill secret in an effort to mute public and political criticism as well as accelerate the passage process. While some GOP members like Richard Burr have said that it is unlikely a Senate bill would be presented this year, the White House has strongly encouraged the Senate to come together to get a bill passed as early as July.

What a Final Bill Might Contain

Given the many political necessities of the ratification process and the ongoing secrecy of Senate Republicans, it is difficult to guess what a final health care reform bill might look like, but some things can be gleaned from the comments from key members. For example, Lisa Murkowski of Alaska is a swing voter that hopes the final bill will continue to fund expanded Medicaid in her state. She would also like to retain access for people with pre-existing conditions.

There are reports that working members are seeking a compromise on the Medicaid expansion. This compromise would defund Medicaid over a longer period of time than allowed in the House bill.  Politically, this would provide more cover for moderate Senators who might fear a backlash from unhappy voters.

Another important sticking point is keeping some of the taxes imposed by the Affordable Care Act. Some moderate Republicans want to keep the net investment income tax, while more conservative members would like to scrap it in addition to the Cadillac tax and the medical device tax.  Others have proposed keeping all of the taxes in an effort to maintain a deficit neutral posture, but to reduce the financial burdens they impose.

Finally, the Senate must wait upon a report by the Congressional Budget Office before it can schedule a vote. Depending on how many would lose or gain coverage could seriously affect the outcome of the vote. Although a failed vote would not necessarily torpedo the Republican health care reform effort for the future, it would almost assuredly cut short any possibility of success in 2017. The Congressional schedule is likely to be filled with other matters like raising the debt ceiling and budget reconciliation that would push out anything else on the legislative agenda. So, if the Senate can’t pass a bill by July or August, it is likely that Obamacare will remain in effect for at least the rest of the year.

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