Last night, Majority Leader Mitch McConnell lost two votes in favor of the Senate’s version of ACA repeal known as the Better Care Reconciliation Act. The defections of Sen. Jerry Moran and Sen. Mike Lee come on the heels of Sen. John McCain’s absence from the Senate due to brain surgery which forced a deferral of action on the bill.
In his statement, Sen. Moran asked for a change in strategy: an open legislative process that would “develop innovative solutions that provide greater personal choice, protections for pre-existing conditions and increased access and overall lower costs for Kansas” – in other words, a unicorn.
Sen. Lee, expressed concern for the Cruz amendment -which he allegedly had a role in drafting – that would permit the sale of non-compliant health plans by insurers that also sell qualified health plans under the ACA. Additionally, Sen. Lee feels the BRCA does not go far enough because it does not repeal regulations and all the ACA taxes.
Well, alright then.
What happens next?
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Sen, McConnell announced last night that he was going to put an updated version of the 2015 repeal via reconciliation up for a vote. Only Sen. Susan Collins voted against that bill. Everyone else will have to explain to their conservative base why they flipped. The probability the Senators will try to avoid this hypocrisy is low but there is a strong current in support of the idea – most notably from the White House. This idea will either force members back to the table to repeal and replace or fail and allow McConnell to put health care behind him and move on to tax reform.
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The happy talk about bi-partisan solutions to stabilize the individual market is, to us, pretty farfetched. The idea that a Sen. Lee would go from “it doesn’t go far enough” to “let’s throw more money at it” is a political impossibility. This theory rests on the notion that Republicans may fear a backlash from voters.
The problem with this theory is that voters are doing what they always do when it comes to their own economic security – they are finding solutions. The ACA does not ban sale of non-compliant health insurance – only a state can do that. It prohibits tax subsidies to help pay for plans that do not meet the standards to the ACA and imposes a modest penalty for those that refuse to purchase compliant plans.
With an administration that has no interest in enforcing the individual mandate and in the face of rising premiums and deductibles people are looking for other solutions like short-term and non-compliant plans. We suspect that the recent uptick in the uninsured rate is just as much people dropping insurance as it is people moving to non-compliant plans. It is altogether possible that administrative indifference will inadvertently deliver affordable options in those states that permit it.
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One of the bipartisan solutions being bandied about would be to attach a market stabilization bill to CHIP reauthorization. CHIP reauthorization already has the problem of its close association with Medicaid. To use it to stabilize the individual insurance market is probably bad news for children in poverty in the US.
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The other back-up plan is the bill sponsored by Sen. Lindsey Graham and Sen. Bill Cassidy. We have not reviewed the legislative text yet but based on releases from their offices, it looks like they have a giant block grant program in mind for the individual insurance market and Medicaid.
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Finally, we will once again remind you that much of what can be accomplished in the AHCA/BRCA can also be done administratively. Certainly the taxes cannot be repealed but indifference to the individual mandate in the face of rising premiums, support for Section 1332 waivers that stabilize markets and approval of Medicaid waivers with work requirements and reduced FPL eligibility do not seem that farfetched.
In the end, the failure to do something will have political consequences that are not likely to abate anytime soon. The individual and small group markets are in shambles and the pressure Medicaid is exerting on state budgets is significant. As long as those forces are at work, we are not willing to declare the repeal effort dead.
Put us down at 50-50 and we will watch things closely in the next few weeks.
Call with questions. We are here day and night
Emily Evans
Managing Director
Health Policy
@HedgeyeEEvans
