OVERVIEW:
Yesterday, Senate Majority Leader Mitch McConnell invoked Senate Rule 14 which allows the American Health Care Act to move directly to the Senate floor, bypassing all committee consideration. The Senate version of the bill will need a CBO score before a vote, however. If the Senators get a bill sent to the CBO by the end of this week or early next, they could have a score in time for a vote by June 30, the last possible legislative day before the July Fourth holiday break.
In the alternative, the Senate could shoot for a vote by July 28, the last legislative day before the August break. In that case, a CBO score would not need to be generated until about the second seek in July, giving the Senators until the third or fourth week of June to craft the legislative text.
If a bill goes to the Senate floor, it will pass.
As far as we have been able to observe, the consensus view of the health care industry – as measured by our very unscientific social interactions at home in Nashville – is that the Senate would never pass a bill. That view appears to be shared by the Street and, until today, by a large number of U.S. Senators. We have never held this opinion. As we explained in a note early last month, the Senate has the same political problems as the House. Failure is not an option.
RECENT MOVEMENT - THEY SAY IT BEST WHEN THEY NOTHING AT ALL:
The last few weeks have been characterized by shockingly few inflammatory statements from the usual suspects – Senators Tom Cotton, Ted Cruz and Rand Paul. Majority Leader McConnell put Senators Cotton and Cruz on a 13 member working group, which subsequently was expanded to include anyone who wanted to participate. This move to essentially co-opt two of the Senate’s most outspoken members in crafting a Senate bill is classic McConnell.
Other perennial flies in the ointment, Senators Lindsey Graham and Bill Cassidy have recently joined with Sen. Paul in muting their criticism. Until yesterday, Sen. Graham was predicting a Senate failure in repealing the ACA. Yesterday, he seems motivated to just get the whole thing over:
“There better be [a vote this month], because this is not like fine wine, it does not get better with age.”
Senator Cassidy, who has been an outspoken critic of the AHCA had this to say yesterday:
“Of course it's not everything I want, but that's life."
Finally, even Sen. Paul’s spokesman refused to throw cold water on the efforts:
“Senator Paul remains optimistic the bill can be improved in the days ahead and is keeping an open mind.”
FAILURE IS NOT AN OPTION - CATALYSTS FOR ACTION:
As we said when the bill left the House for the more moderate Senate, the pressures swirling around the ACA and its repeal – in whole or in part – do not evaporate because the Senate is now in control of the process. To wit:
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The individual market is still a mess and getting worse. While Tennessee has convinced Blue Cross and Blue Shield to cover the non-group market in those counties in east Tennessee left without an individual insurer, Medica has announced its exit in Iowa and Anthem will not participate in the Ohio exchange.
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The legal disposition of the lawsuit, House v. Price, over the cost-sharing subsidies makes it very difficult to bring stability to the individual market without a legislative response.
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Premiums, given the uncertainty of the program and increased medical costs, are set to increase a lot yet again. While people living under 400 percent of the FPL are insulated from these increased costs, the 10 million people in the individual market who are not eligible for subsidies are not.
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Even moderates like Sen. Cassidy want to see Medicaid reformed and the AHCA offers the first, best hope for that in 50 years.
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The AHCA stands in the way of President Trump and Congressional Republicans priorities – namely a pro-growth agenda focused on tax reform, trade and infrastructure spending.
MEET THE NEW BILL, (PRETTY MUCH) SAME AS THE OLD BILL - LIKELY SENATE CHANGES:
Despite certain Senators’ claims that they would “write their own bill” or “start over,” what ultimately gets approved by the Senate will be a modified version of the American Health Care Act. The Senate-passed bill must reduce the deficit by at least as much as the House bill did – about $135 billion. At this point in a very unpredictable process, likely modifications to the bill are:
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A longer ramp for states to adjust to a rollback of Medicaid expansion. The House wants the expansion repealed yesterday, but the Senate will never agree to such an aggressive timeline. There is some talk of reducing the annual growth factor from CPI-U Medical Care (or CPI-U Medical Care +1) but we doubt that gets legs.
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More money for everything. The Senate will likely increase stability funding including money available immediately to limit insurer exits including the much litigated cost-sharing reductions.
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There will be protections for people with pre-existing conditions because, as Sen. Cassidy wryly noted – the only people on the ACA exchanges are those with pre-existing conditions. Protections for people with pre-existing conditions may include a requirement for continuous coverage and if it does, there will be a long transition period.
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Industry taxes will be repealed. Other taxes, including the Cadillac tax are up in the air.
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Protections for people with mental health and substance abuse conditions.
There is still plenty of opportunity to run the AHCA into a ditch, but we think the sheer fatigue over the issue will drive the agenda and assure passage before the August recess.
Call with questions. We are a Comey-free zone all day and well into the evening
Emily Evans
Managing Director
Health Policy
@HedgeyeEEvans
