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REPEAL & REPLACE = REPAIR & REPACKAGE?

Fifty-seven days since the 115th Congress was sworn in.  Forty days since President Donald Trump took the oath of office.  The clock is ticking on the Republican campaign promise to repeal and replace the Affordable Care Act, and the solution is proving illusive as disagreements in the Republican conference surface.

All eyes were on President Trump last night.  Republican congressional leaders hoped the President would use his first address to Congress to endorse the plan being developed by the House Republican leadership.  Although Trump touted many elements of the House Republican plan leaked last week (tax credits to help individuals buy coverage, expanded use of health savings accounts, more flexibility for state Medicaid programs, allowing plans to be sold across state lines, and maintaining protection for individuals with pre-existing conditions), he came short of endorsing the plan and failed to set a deadline for Congress to take action.

CONGRESSIONAL REPUBLICANS

Senate Republicans meet today to discuss how to proceed.  With Democrats united in opposition to any proposal to repeal and replace the Affordable Care Act, Republicans will have to hold their conference together to move a bill through Congress, particularly in the Senate where Republicans maintain a slim 52-48 majority.  In January, both chambers adopted a budget resolution to allow a fast-track process (reconciliation) to move legislation in the Senate with a simple majority vote, thereby preventing Democrats from blocking the bill.  Yet, as described below, the budget reconciliation process is limited to spending and revenue related issues, meaning it will not be possible to use the reconciliation process to fully repeal, replace, or repair the Affordable Care Act.

Action is expected to start in the House with a potential markup in the Energy and Commerce Committee next week.  Speaker Paul Ryan (R-WI) wants to move the repeal bill by the end of March.  Once the House passes a bill, it is expected to be taken up by the full Senate, bypassing Senate committee consideration.

KEY VARIABLES

Big questions remain.  The Republican conference is divided on whether to link the repeal effort with a replace plan, and major issues remain unresolved, including what to do about states that have expanded Medicaid, whether the tax credits should be refundable, and how to minimize political blowback from constituents who may lose coverage.

These variables will likely shape the reconciliation bill:

  • Vote Count – With united opposition among Democrats, Republicans must depend on their own conference for the 218 votes necessary in the House and 51 in the Senate. In the House, Republican leaders must navigate a potential divide between the more conservative Members who oppose efforts to provide a refundable tax credit to help individuals purchase insurance and the nearly three dozen Members in swing districts (23 Republicans in districts Hillary Clinton won in the presidential election and another dozen districts President Barack Obama won in 2010 but Trump won in 2016) who are reluctant to vote for a repeal bill without taking steps to stabilize the market and ensure individuals do not lose coverage.  In the Senate, the math is even more complicated.  Republicans can only afford to lose three votes.  Senators Rand Paul (R-KY), Mike Lee (R-UT), and Ted Cruz (R-TX) are already expressing concern with the plan emerging in the House.
  • Town Hall Meetings – During the recess, Republicans faced angry constituents at town hall meetings across the country. While some claim the crowds were organized (and even paid), it is unclear what effect the town halls will have on Members, and whether the protests will be sustained in the coming weeks.
  • Governors – One of the big challenges Republicans must address is what to do about the 31 states – including 11 with Republican governors – that accepted federal funding under the Affordable Care Act to expand access to Medicaid. Ohio’s Republican Governor John Kasich is leading an effort to pressure congressional Republicans to maintain the Medicaid expansion.  President Trump met with Kasich on Friday, and the White House met with governors on Monday. 
  • Planned Parenthood – House Republicans are under pressure to include a provision to defund Planned Parenthood. Although federal dollars are already prohibited from covering abortion services, anti-abortion groups argue the funding is fungible.  While House Republicans have the votes to defund Planned Parenthood, the provision may complicate Senate passage.  Senator Lisa Murkowski (R-AK) pledged to oppose any bill that defunds Planned Parenthood, and with a 52-48 majority, Republicans cannot afford to lose many votes. 
  • Senate Parliamentarian – The reconciliation process allows Congress to repeal only portions of the Affordable Care Act with a simple majority vote. Under Senate rules, a point of order can be raised against any provision that does not directly impact spending or revenue, which means the Senate Parliamentarian will play a major role in this debate.  Elizabeth MacDonough was appointed to the non-partisan post in 2012 by then-Senate Majority Leader Harry Reid (D-NV).  During the 2015 repeal effort, MacDonough ruled that the provision that would roll back the Independent Payment Advisory Board disqualified the package from consideration as a reconciliation bill, effectively killing it.  While congressional Republicans passed a reconciliation bill to undo significant portions of the Affordable Care Act, any replace effort will be more complicated.
  • Congressional Budget Office (CBO) – The ultimate test to Republicans will come from the CBO, which will score the legislation in terms of its cost and its effect on coverage.  Any proposal that covers fewer Americans than the 20 million covered by the Affordable Care Act will put Republicans in a difficult position and may make it harder to sell their plan to the public.

SUMMARY OF HOUSE REPUBLICAN PLAN

On Friday, a draft House Republican plan was leaked to the press.  Although the draft was dated February 10 and has likely changed, it provides a good overview of the reforms likely under consideration.  The draft bill also closely tracks a blueprint the House Republican leadership released on February 16.  Below is a high-level summary of the key provisions.

  • Ends mandate for individuals to buy insurance but allows insurers to charge 30 percent more to people who had a gap in coverage and then signed up again.
  • Replaces the subsidies with refundable tax credits based on a person’s income and age.
  • Provides $10 billion for state innovation grants (g., high-risk pools and premium stabilization).
  • Phases out federal funds for states to expand Medicaid in 2020. In addition, Medicaid funding to states would be capped based on the number of Medicaid enrollees in each state.
  • Eliminates funding for Planned Parenthood.
  • The legislation would be paid for by capping the amount an employer can spend on health insurance that is excluded from federal income and payroll taxes.

Republicans are slowly uniting around this plan.  Clearly the devil is in the details, and as President Trump pointed out earlier this week, “nobody knew that health care would be so complicated.”

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