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Chronicle of a Death Foretold: ACA Repeal and Replace Stalls in Senate

This In Focus article, authored by HMA Managing Principal Greg Nersessian, CFA  and Research Assistant Anh Pham, was originally published in the August 2, 2017 HMA Weekly Roundup.

In deference to Miracle Max, after last week’s failed votes on “Repeal and Replace,” “Straight Repeal,” and “Skinny Repeal,” the GOP’s efforts to undo the Affordable Care Act (ACA) through budget reconciliation appear to be at least “mostly dead.” While it is possible strictly partisan discussions will reaccelerate at some point, it appears that Congress is, for the first time, considering bipartisan proposals for shoring up the underwriting challenges in the individual market. In light of this change in direction, we are using this week’s In Focus section to chronicle the events that transpired over the last five months leading to last week’s historic vote. Our objective here is to create a reference piece for our readers so that the next time Congress revisits major healthcare legislation we can look back on the strategies and approaches that led to last week’s result.  Many times over the last eight months, we have reflected on the key dynamics surrounding the passage of the ACA in 2010 as a guide for what factors to watch in the efforts to repeal the ACA – budget reconciliation issues, Congressional Budget Office (CBO) scoring, key proposals to win over recalcitrant legislators, the President’s role in pushing the agenda – but our memories were not always up to the task. So in the spirit of having a reference document for future reflection, we record below the key events associated with this effort.

It is worth mentioning that we, the editors of the HMA Weekly Roundup, were as unsure of the outcome of last week’s votes as anyone.  We took some solace in that the experts and our friends in the business of Washington punditry shifted their probabilities of passage from week to week, even day to day, if not hour to hour, as the political momentum swung from one outcome to the other.  That said, we were reminded that there was one interested observer who foretold the outcome of the GOP’s repeal and replace efforts before the legislative process even started in earnest. Who was this this congressional clairvoyant? None other than former House Speaker John Boehner who, two weeks before the House of Representatives introduced the American Health Care Act (AHCA), predicted at a health care conference in Orlando, Florida that “I shouldn’t have called it repeal and replace because that’s not what’s going to happen…Most of the framework of the Affordable Care Act … that’s going to be there. They will never ever agree on what the bill should be. Perfect always becomes the enemy of the good.” Boehner concluded, “Republicans never ever agree on health care.”[1] Words to remember.

House Actions

  • March 6, 2017 – House Republicans released the American Health Care Act (AHCA) (H.R. 1628), their proposal to repeal-and-replace the Affordable Care Act (ACA). If passed, the AHCA would restrict federal funding for Medicaid, roll back the Medicaid expansion in 2020, and eliminate the individual and employer mandates. States would receive per capita funding amounts for select groups of Medicaid beneficiaries based on historical spending. Annually, the per capita caps would be recalculated based on changes to the Consumer Price Index (CPI). Under the AHCA, children would be able to stay on their parents’ insurance plan until age 26 and prohibits insurers from refusing an individual coverage for a preexisting condition. Also, the federal government would continue providing tax credits. Starting in 2020, the tax credits would be determined by household income, age, and limited to $14,000 per family. Individuals could also contribute to their own health savings accounts (HSA).[2] House Speaker Paul Ryan (R-WI) issued a press release introducing the AHCA and praising it as a plan that will “drive down costs, encourage competition, and give every American access to quality, affordable health insurance.”[3] In his statement, he reassured that the bill would also “protects young adults, patients with pre-existing conditions, and provides a stable transition so that no one has the rug pulled out from under them”[4] The bill was immediately met with opposition from the House Freedom Caucus and the Republican Study Committee (RSC). The RSC drafted a policy memo the same day the bill was passed expressing their opposition to the bill.
  • March 8, 2017 – The House Energy and Commerce Committee and the House Ways and Means Committee approved the AHCA. The bill passed without a nonpartisan economic analysis from the Congressional Budget Office (CBO). The panel rejected various Democratic amendments, including requiring that people not lose health coverage under the legislation and that the plan not increase out-of-pocket costs for older people.[5]
  • March 8, 2017 – In a meeting with House Republicans, President Trump warned that there could be a “bloodbath” in the 2018 midterm elections if they could not meet their seven year promise to repeal and replace Obamacare.
  • March 12, 2017 – The CBO and the Joint Committee on Taxation (JCT) released their budget analysis of the AHCA. They projected that the House GOP-proposed bill would result in 14 million more individuals who are uninsured than under current law by 2018, rising to 21 million in 2020, and 24 million in 2026. In total, the number of uninsured in America would nearly double to 52 million in 2026. However, the CBO-JCT estimates project the AHCA would reduce federal deficits by $337 billion over the 10-year period from 2017 to 2026, with savings coming from reductions in Medicaid outlays and ACA tax credit subsidies. CBO-JCT also projects that individual premiums under the AHCA would be 15 percent to 20 percent higher than under current law in 2018 and 2019.[6] Democrats, including U.S. Representatives Frank Pallone (D-NJ) and Richard Neal (D-MA), used the CBO projections to highlight the shortfalls of the AHCA, stating “the Republican plan does absolutely nothing to control costs or protect consumers…Instead, it guts Medicaid, raises costs on older Americans, and pulls billions of dollars from Medicare, all in order to pay for tax cuts for the rich.”[7]
  • March 13, 2017 – Given the internal strife within House Republicans, House Speaker Ryan joined President Trump in warning Republicans that there would be a “bloodbath” in the 2018 elections if they fail in their promise to repeal and replace the ACA.
  • March 16, 2017 – The House Budget Committee passed the AHCA in a 19-17 vote, sending the AHCA to the House Floor. They also recommended several changes to AHCA, which include prohibiting additional states from expanding Medicaid, establishing Medicaid work requirements, giving states the option to receive block grants or per capita funding, and repealing the Affordable Care Act (ACA) taxes by the end of 2017, among other changes.[8]
  • March 20, 2017 – The House introduced the AHCA to the House Floor. To view this version of the bill, click here.
  • March 23, 2017 – House Republican leaders delayed the vote on the AHCA, originally scheduled for Thursday at 7 p.m., due to opposition from both moderate and conservative House Republicans. According to Representative Mark Meadows, head of the Freedom Caucus, the House did not have enough votes to pass the bill. Instead, the House Republicans held a meeting to discuss next steps.
  • March 24, 2017 – After four hours of debate, House Speaker Paul Ryan pulled the AHCA bill from the House floor before a scheduled vote. Speaker Ryan rushed to the White House to inform President Trump that they did not garner enough support to pass the AHCA. With moderate and conservative Republicans at odds, it became clear early in the day that the bill would be not be passed. According to a leadership aide, President Trump asked Speaker Ryan to pull the bill.
  • April 4, 2017 – Vice President Mike Pence and two White House officials proposed several changes to the AHCA to attract the votes of hardline conservative Republicans. These changes include allowing states to seek waivers to permit insurance companies to deny coverage for certain pre-existing conditions.[9]
  • April 6, 2017 – Representatives Gary Palmer (R-AL) and David Schweikert (R-AZ) added an amendment to the AHCA that would create a federal risk sharing program within the AHCA’s Patient and State Stability Fund (PSSF) program. This would provide an extra $15 billion for insurers to help pay for high-cost customers. The risk-sharing program’s goal was to stabilize insurance markets by lowering premiums and, in turn, attracting more individuals to purchase insurance. The measure passed by a party-line vote of nine to two.[10]
  • April 11 – 20, 2017 – House Recess – During the House Recess, U.S. Representatives that called for the ACA to be repealed and replaced were greeted by crowds of angry constituents. Constituents vocally expressed their opposition to the AHCA and even threatened to vote their respective representatives out of office.
  • April 20, 2017 – Representative Tom MacArthur (R-NJ) introduced an amendment to the AHCA, which would allow states to apply for waivers to opt out of many provisions of the ACA, such as charging consumers more based on age and pre-existing conditions, and changing or eliminating the Essential Health Benefits requirement.
  • May 3, 2017 – Senator Fred Upton (R-MI) introduced an amendment, which would create an $8 billion fund that would be distributed to states that permit insurers to charge individuals with pre-existing conditions higher premiums.
  • May 4, 2017 – The House passed the AHCA without a revised CBO analysis in a 217/213 vote, moving the bill to the Senate.[11] To view this version of the bill, click here. Shortly after the House passed the bill, President Trump celebrated its passage in the Rose Garden at the White House. At the event, President Trump provided a prediction that the bill would get better as it moved to the legislative process. The President stated, “most importantly, yes, premiums will be coming down. Yes, deductibles will be coming down.” President Trump also applauded Republican efforts in their accomplishments, particularly House Speaker Paul Ryan, who the President mentioned had concerns about whether the bill would pass earlier in the week. Democrats and several Republicans issued statements in opposition regarding the House’s vote. Senator Chuck Schumer expressed his skepticism that the bill would be as successful in the Senate stating, “This bill is going nowhere fast in the United States Senate,” and advised that Republican Senators try to pass a different bill rather than “follow their House colleagues over a cliff.” Representative Nancy Pelosi painted a grimmer portrait for House Republicans warning that they will “pay the price” in 2018.
  • May 18, 2017 – The AHCA was being held until the CBO issues its final score. Since the bill was being moved through budget reconciliation, the bill needed to save at least $2 billion in the federal budget. If the CBO analysis found that there was not a net savings in the budget, the House would have to vote on a revised AHCA bill.[12]
  • May 24, 2017 – The CBO released the cost estimate of the AHCA, as passed by the House on May 4, 2017. The estimates detailed budgetary and enrollment impacts of the bill over the 2017 to 2026 time period. The CBO estimated that 23 million more individuals would be uninsured by 2026 as compared to the current baseline estimates, with 14 million more uninsured by 2018. Medicaid enrollment was predicted to be 14 million less than the current baseline by 2026, while Medicaid expenditures over the ten-year period were expected to decrease by $834 billion, with an overall reduction of $119 billion to the federal deficit. The CBO also estimated that by 2020, one-sixth of Americans will reside in states that waive provisions such as essential health benefits and lifetime coverage limits. However, the CBO also found that community-rated premiums could likely rise over time.[13] In an interview with Politico, former CBO Director Douglas Elmendorf stated that the House decision “to go ahead with a vote before you know the effects of what you’re voting for is a terrible mistake.”

Senate Actions

  • May 4, 2017 – Senate Republicans announced that they will be drafting their own repeal-and-replace health bill.
  • May 9, 2017 – Senate Republicans created a 13-person working group tasked with drafting a new bill. The members consisted of conservative foes of the ACA and the decision to exclude women from the working group was widely criticized. The members of the working group were:
    1. Senator Mitch McConnell (R-KY), Senate Majority Leader
    2. Senator Orrin Hatch (R-UT), Senate Finance Committee Chair
    3. Senator Lamar Alexander (R-TN), Senate HELP Committee Chair
    4. Senator Mike Enzi (R-WY)
    5. Senator John Thune (R-SD), Chair of the Republican Conference
    6. Senator Mike Lee (R-UT), Chair of the Senate Republican Steering Committee
    7. Senator Ted Cruz (R-TX)
    8. Senator Tom Cotton (R-AR)
    9. Senator Cory Gardner (R-CO), Chair of the National Republican Senatorial Committee
    10. Senator John Barrasso (R-WY), Chair of the Senate Republican Policy Committee
    11. Senator John Cornyn (R-TX), Senate Majority
    12. Senator Rob Portman (R-OH)
    13. Senator Pat Toomey (R-PA)
  • June 19, 2017 – Senate Majority Leader Mitch McConnell (R-KY) announced that the draft Senate health bill was sent to the CBO. Senate Republicans announced that they plan to vote on the bill by June 30.
  • June 22, 2017 – Following weeks of criticism from both Senate Republicans and Democrats over the secretive process in drafting the bill, Senate Majority Leader McConnell released a discussion draft of its ACA repeal-and-replace bill, called the Better Care Reconciliation Act of 2017 (BCRA). The bill would phase out enhanced federal funding for Medicaid expansion, limit tax subsidies for Exchange plans to individuals with incomes below 350 percent of poverty, and shift Medicaid to a per capita cap funding model with a state option to take block grants. The bill would also fund a temporary federal reinsurance program to stabilize the individual insurance market. States would then have to implement their own reinsurance programs with federal assistance through 2026.[14] Senator Rand Paul (R-KY) called the BCRA “Obamacare lite.”
  • June 22, 2017 – Senator Mitch McConnell encountered protests after releasing the draft bills. Individuals with disabilities protesting the bill were forcibly removed from the Senator’s office and arrested.
  • June 26, 2017 – The Senate revised the BCRA to prohibit individuals from purchasing insurance for six months if they had a gap in coverage of 63 days or longer in the previous year. The rule, which would take effect in 2019, would apply to individuals attempting to purchase insurance during open enrollment or because of a qualifying event. The rule, which is designed to encourage people to purchase insurance, offers an alternative to the insurance mandates. To view this version of the bill, click here.
  • June 26, 2017 – The CBO released its scoring of BCRA, estimating that the legislation would cause 22 million more individuals to be uninsured by 2026, compared to 23 million under the House bill passed in May. The cumulative federal deficit would be reduced by $321 billion over the 2017-2026 period.[15] The CBO estimated the largest savings would come from Medicaid, which would see a 26 percent decline in 2026. Following the CBO analysis, Tom Perez, Democratic National Committee Chairman declared the BCRA a “disaster for women, older Americans, and people with pre-existing conditions.”[16]
  • June 27, 2017 – Senate Majority Leader McConnell (R-KY) delayed a planned vote on the BCRA until after the July 4th The decision comes as Senators Susan Collins (R-ME), Dean Heller (R-NV), Mike Lee (R-UT), and Ron Johnson (R-WI) indicated they would vote against the bill. In response, Senate leaders decided to push for a vote by the end of July.[17]
  • June 30, 2017 – Growing frustrated with the legislative process, President Trump changes his stance on repealing and replacing the ACA simultaneously, tweeting, “If Republican Senators are unable to pass what they are working on now, they should immediately REPEAL, and then REPLACE at a later date!”
  • July 3 – 7, 2017 Recess – During the July 4th Recess, Senate Republicans opted not to hold listening sessions with their constituents. Representative Jerry Moran (R-KS) and Bill Cassidy (R-LA) were the only Senate Republicans to host town hall meetings.
  • July 11, 2017 – Senate Majority Leader McConnell (R-KY) delayed the start of the Senate’s August recess until the third week in August to allow more time to amend the BCRA.
  • July 13, 2017 – Senator Ted Cruz (R-TX) introduced an amendment that would permit insurers that offer a Gold, Silver, and Bronze plan on the Exchange market to also offer plans that do not comply with the ACA requirements. Additionally, states would be permitted to apply for block grant funding for the Medicaid expansion population and exceed block grant caps in the event of a public health emergency. To view this version of the bill, click here.
  • July 13, 2017 – Senators Susan Collins (R-ME) and Rand Paul (R-KY) announced their opposition to the BCRA.
  • July 17, 2017 – The Senate postpone the vote on BCRA after Senators Mike Lee (R-UT) and Jerry Moran (R-KS) announced their opposition to the bill. In response, President Trump tweeted, “Republicans should just REPEAL failing ObamaCare now & work on a new Healthcare Plan that will start form a clean slate. Dems will join in!”
  • July 18, 2017 – Senate Republicans propose a plan to introduce a bill to repeal the ACA, but the proposal was dropped after Senators Susan Collins (R-ME), Shelley Moore Capito (R-WV), and Lisa Murkowski (R-AK) announced their opposition to the bill. President Trump told reporters that he intends to let the ACA fail as it would be easier, stating, “let Obamacare fail. It would be a lot easier…We’re not going to own it. I’m not going to own it…I can tell you the Republicans are not going to own…We’ll let Obamacare fail, and then the Democrats are going to come to us.”
  • July 18, 2017 – Senate Majority Leader McConnell announced that the Senate will hold a vote on BCRA on the week of July 24.
  • July 19, 2017 – President Trump hosted a White House lunch for Senate Republicans, urging an alternative plan to replace the ACA before leaving for the August recess.
  • July 19, 2017 – After a strong push by Senator Rand Paul (R-KY), the Senate posted the Obamacare Repeal Reconciliation Act (“ORRA”), which would repeal the ACA without replacement. ORRA is identical to the bill passed in 2015 by the House and Senate. The bill was eventually vetoed in 2016 by President Obama.
  • July 19, 2017 – The CBO released its score of ORRA. The CBO reported that by 2018, 17 million more people would be uninsured than would be under current law. That number would increase to 27 million in 2020, and finally to 32 million in 2026. The agency also projected that the ORRA would decrease the federal deficit by $473 billion from 2017 to 2026.
  • July 20, 2017 – Senate Republicans released the latest version of the BCRA, which was sent to the CBO for scoring. This version of the BCRA incorporated the July 13, 2017, Amendment and excluded the amendments made by Senator Cruz (R-TX). To view this version of the bill, click here.
  • July 20, 2017 – The CBO released its report on the July 20th version of the BCRA. According to the CBO’s analysis, the BCRA was projected to reduce the federal deficit by $321 billion between 2017 and 2026. The CBO also projected that the bill would increase the number of uninsured Americans, and that, by 2018, 15 million more individuals would be uninsured than would be under current law. By 2020, that difference would reach 19 million more people, and in 2026, 21 million more people would be left uninsured compared to current law.
  • July 25, 2017 – Senate Majority Leader McConnell announced after 20 hours of debate, he would call for a vote on ORRA. If it fails, he will call for a vote on the July 20th version of the BCRA. Senate leadership will introduce a “skinny repeal” bill. This bill would leave almost all of the ACA in place, but it would eliminate the individual mandate, the employer mandate, and the medical device tax.
  • July 25, 2017 – The Senate voted to debate BCRA. The vote was called upon Senator John McCain’s (R-AZ) return to Washington, less than two weeks after having a procedure done to remove a major blood clot from his brain and being diagnosed with a brain tumor. The motion to proceed on debate passed after Vice President Mike Pence broke a Senate 50-50 vote. Senators Susan Collins (R-ME) and Lisa Murkowski (R-AK) voted against the motion. Following the vote, McCain gave an impassioned speech on the Senate floor imploring colleagues to consider bipartisan compromise and a return to regular order, noting “We’ve tried to do this by coming up with a proposal behind closed doors in consultation with the administration, then springing it on skeptical members, trying to convince them it’s better than nothing, asking us to swallow our doubts and force it past a unified opposition. I don’t think that is going to work in the end. And it probably shouldn’t.”
  • July 25, 2017 – The Senate introduced a new version of the BCRA that incorporated the Cruz and Portman amendments. The Portman amendment would provide $100 billion intended to lower insurance costs and stabilize the marketplace.
  • July 26, 2017 – The Senate voted to reject BCRA in a 43-57 vote. The Senate will continue to debate, propose amendments, and potentially vote on repealing and replacing certain portions of the ACA. Three Republican Senators that voted against the bill: Senator Susan Collins (R-ME), Senator Lisa Murkowski (R-AK), and Senator John McCain (R-AZ). Following the vote, President Trump shamed Republican Senators that voted against the bill, tweeting, “Senator @lisamurkowski of the Great State of Alaska really let the Republicans, and our country, down yesterday. Too bad!”
  • July 27, 2017 – Senators Lindsey Graham (R-SC), Ron Johnson (R-WI), and John McCain (R-AZ) announced that they would not vote for the “skinny bill.” House Republicans considered enacting “martial law,” which would waive chamber rules that mandate they wait three days after a bill is made public to vote on BCRA. If the bill were passed, this would allow House Republicans the opportunity to take up the Senate bill immediately and enact the bill.
  • July 27, 2017 – President Trump tweeted, “3 Republicans and 48 Democrats let the American people down. As I said from the beginning, let ObamaCare implode, then deal. Watch!”

Next Steps

  • July 31, 2017 – With the failure to repeal and replace the ACA, a bipartisan coalition of 40 Representatives announced they hope to introduce legislation aimed at stabilizing the health insurance Exchanges. The “Problem Solvers” coalition, which is led by Tom Reed (R-NY) and Josh Gottheimer (D-NJ), are seeking to ensure funding for insurance cost-sharing subsidies, modify the employer mandate, create a federal stability fund for individuals with high-cost medical conditions, eliminate the medical-device tax, and allow for greater state innovation.

[1] http://www.politico.com/story/2017/02/john-boehner-obamacare-republicans-235303

[2] http://khn.org/news/house-gop-health-bill-jettisons-insurance-mandate-much-of-medicaid-expansion/

[3] https://www.speaker.gov/press-release/statement-introduction-american-health-care-act

[4] https://www.speaker.gov/press-release/statement-introduction-american-health-care-act

[5] https://www.nytimes.com/2017/03/09/us/politics/health-bill-clears-house-panel-in-pre-dawn-hours.html?_r=1

[6] See Attachment

[7] https://www.advisory.com/daily-briefing/2017/03/14/cbo-report

[8] http://www.modernhealthcare.com/article/20170320/NEWS/170329984

[9] http://www.cnbc.com/2017/04/04/white-house-officials-offer-change-to-health-care-bill.html

[10] https://www.nytimes.com/2017/04/06/us/politics/health-care-affordable-care-act-house.html

[11] http://www.reuters.com/article/us-usa-healthcare-idUSKBN18014F

[12] http://www.businessinsider.com/gop-health-care-bill-re-vote-obamacare-cbo-score-2017-5

[13] https://www.cbo.gov/publication/52752

[14] http://www.modernhealthcare.com/article/20170622/NEWS/170629968

[15] http://www.modernhealthcare.com/article/20170626/NEWS/170629913

[16] https://www.cnbc.com/2017/06/26/cbo-to-release-crucial-report-on-senate-obamacare-replacement-bill.html

[17] http://www.modernhealthcare.com/article/20170627/NEWS/170629901

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