Senate Obamacare repeal bill would slash federal healthcare funding for Medicaid

Senate Republicans have their version of a plan to replace Obamacare, following their colleagues in the House who narrowly passed a replacement measure with no Democratic support.

By Noam N. Levey

and Lisa Mascaro

June 22, 2017 3 AM PT

Reporting from Washington — Senate Republicans unveiled a draft bill on Thursday to roll back the Affordable Care Act, including a drastic reduction in federal healthcare spending that threatens to leave millions more Americans uninsured, drive up costs for poor consumers and further destabilize the nation’s health insurance markets.

The legislative outline, which Senate Majority Leader Mitch McConnell’s team wrote largely behind closed doors, hews closely to the Obamacare repeal bill passed last month by House Republicans, though it includes important differences. The House version was first celebrated by President Trump in a White House Rose Garden ceremony, though he later criticized the bill as “mean.”

Like the House bill, the Senate plan would eliminate hundreds of billions of dollars in taxes over the next decade, with large benefits for the wealthiest Americans. And like the House bill, it would pay for those cuts by dramatically reducing federal money for Medicaid, likely forcing states to make deep cuts in their healthcare programs for the poor. Trump promised during his campaign not to reduce Medicaid.

Although the Senate bill preserves premium subsidies that help some low-income buyers purchase insurance, it would scale them back significantly.

The reductions in federal spending for healthcare, which would be the largest rollback of the federal health safety net in history, drew sharp criticism from patient groups, doctors and some insurers.

McConnell hopes to call a vote on the measure next week, all but daring Republican holdouts to oppose it and prolong what has already been a politically painful process to fulfill their promise to do away with Obamacare.

It remained unclear whether McConnell has the 50 votes he needs for passage, as almost a dozen GOP senators voiced reservations. Moderates thought the bill was too harsh, while conservatives wanted a faster rollback of Obamacare.

A few hours after McConnell released the text to a closed-door meeting of Senate Republicans, four conservatives — Sens. Ted Cruz of Texas, Mike Lee of Utah, Ron Johnson of Wisconsin and Rand Paul of Kentucky — announced their opposition to the draft.

“It looks a lot like Obamacare, actually,” Paul said of the draft.

Among the party’s centrists, Sen. Dean Heller of Nevada said he had “serious concerns,” citing the cuts to Medicaid. Sen. Shelley Moore Capito of West Virginia said she was concerned about the impact on treatment for opioid addiction. Sen. Bill Cassidy of Louisiana said he was also not yet ready to support the measure. “There will still be changes,” he said.

After spending seven years promising to repeal President Obama’s signature healthcare law — and winning elections in part on that promise — Republicans are under intense pressure to deliver. But the current law has grown increasingly popular, and many more Americans are insured, making the new safety net difficult to unravel.

Trump said Wednesday night at a campaign-style rally in Cedar Rapids, Iowa, that he had told senators to “add some money to it” to produce a healthcare bill with “heart.”

Asked Thursday morning whether the Senate draft met that standard, the president suggested some changes were needed.

“A little negotiation, but it’s going to be very good,” he told reporters.

But Senate Minority Leader Charles E. Schumer (D-N.Y.) said that by slashing taxes on the wealthy and cutting healthcare for the poor, “the Senate version of Trumpcare is even meaner than the House bill.”

Former President Obama picked up on the theme Trump began, saying that “small tweaks over the course of the next couple weeks ... cannot change the fundamental meanness at the core of this legislation.”

The legislation also drew quick condemnation from across the nation’s healthcare system and from leading consumer advocates.

“For the hospitals that protect millions of Americans and their communities — our essential hospitals — this bill might even accelerate decisions by some to reduce services or close their doors,” said Dr. Bruce Siegel, president of America’s Essential Hospitals, a trade group representing safety-net medical centers across the country.

League of Women Voters President Chris Carson called the Senate draft “a nasty bill that will hurt millions of Americans.… The senators who wrote this bill should be ashamed of themselves.”

McConnell, however, defended his plan. In a Senate speech, he said it would “eliminate costly Obamacare taxes that are passed on to consumers, so we can put downward pressure on premiums,” and that it would “shift power from Washington to the states so they have more flexibility to provide more Americans with the kind of affordable insurance options they actually want.”

Like the House effort, the Senate bill appears likely to produce major losses in insurance coverage as hundreds of billions of dollars in federal healthcare assistance to low- and moderate-income Americans are cut over the next decade.

An independent analysis of the Senate legislation from the nonpartisan Congressional Budget Office is expected in the next several days.

The Senate bill eliminates the current law’s mandate that every American carry insurance. But, unlike the House bill, it includes no incentive or penalty to ensure younger, healthier people get coverage. That could further destabilize insurance markets, as has happened in the past when states have guaranteed coverage with no mandate.

In a nod to conservatives, the proposed Senate legislation effectively puts new restrictions on federal funding for Planned Parenthood, barring organizations that perform abortions from receiving Medicaid funding, even for nonabortion services.

The centerpiece of the Senate bill is a series of major reductions in federal aid for healthcare. The reductions would hit poor Americans who rely on the government Medicaid program and moderate-income consumers who currently qualify for federal subsidies to help them buy private health insurance through the Obamacare marketplace.

The expansion of Medicaid benefits offered under Obamacare would be phased out beginning in 2020 and shut down completely by 2023. That’s a longer time period than the House bill, although the end result is the same.

To date, 31 states have expanded Medicaid eligibility since 2014, helping to drive a historic reduction in the number of uninsured Americans — including many of those now struggling with opiate addiction.

Over the last four years, the share of people without coverage in the U.S. has been cut in half, data show.

Most significantly perhaps, the Senate bill would cap all future federal Medicaid money to states. That would fundamentally transform a safety-net health insurance program that now covers about 70 million poor Americans. Such a cap would likely require states to either scale back insurance coverage or cut services, according to independent analyses from the CBO, which estimated that the House bill would leave 23 million more Americans without health insurance.

The Senate proposal would end the federal government’s half-century-old guarantee to cover Medicaid patients’ medical costs, and instead give states a limited amount of money to care for its poorest residents, regardless of the actual amount the state needs to spend.

Separately, the Senate bill restructures the system of subsidies that helps Americans pay for private insurance on the Obamacare marketplaces. These tax credits, which about 8 million Americans receive, lower the cost of insurance plans that consumers can buy on HealthCare.gov, Covered California and other insurance marketplaces.

Under Obamacare, the amount of assistance available is linked to how much people earn and where they live, with larger subsidies for lower-income consumers and residents of regions with very high insurance costs.

Republicans have been split over how exactly to undo this system, mindful that they will probably be jacking up costs for many consumers.

Unlike the House bill, the Senate measure continues to link the subsidies to consumers’ incomes, though it makes the aid available only to people making up to 350% of the federal poverty line, compared with 400% under current law.

In addition, the Senate legislation would create a new formula for calculating the amount of assistance individuals get. The subsidy would be tied to the price of cheaper health plans. That would reduce the value of aid available to most consumers.

The plan would also eliminate, after 2019, the extra assistance that Obamacare provides to low-income consumers to reduce their deductibles. Without that, many low- and moderate-income Americans could be left to buy health plans with deductibles that reach $6,000 or higher, effectively putting most medical care out of reach.

At the same time, the bill would loosen requirements in Obamacare that health plans cover a basic set of benefits, a change that patient advocates and consumer groups have warned would once again leave many sick Americans with inadequate or unaffordable coverage.

Many Republican senators are worried about further destabilizing insurance markets that have already been buffeted by uncertainty about the Trump administration’s commitment to keeping the markets afloat.

To address this, the Senate bill would provide billions of dollars in new federal aid to stabilize markets.

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@LisaMascaro

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