While our probability for repeal and replacement and/or reform of the ACA sits at about 30 percent, we are compelled to report a slight upward bias today in light of the events of the past 48 hours. The consensus, of course, is that Congress will not act and the status quo, or at least the Trump era version of it, will be preserved. The unusual turn of events – President Trump’s deal with Democrats on debt ceiling, Harvey relief and budget; and Senator John McCain’s endorsement of a Graham- Cassidy-Heller amendment – combined with a hard stop of Sept. 30 to pass something under reconciliation, makes us a little less sure the American Health Care Act (AHCA) is completely left for dead.
We aren’t changing our odds just yet – the next seven days will be telling – but we think investors should at least entertain the idea the AHCA could return.
Trump’s deal with “Chuck and Nancy” on raising the debt ceiling, providing relief for victims of Hurricane Harvey and funding the government through Dec. 8 sends several critical messages to the opposite end of Pennsylvania Avenue:
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Congress, not Trump, is to blame for the dearth of legislative achievements this year and the president will take victories where he can get them even if it means reaching across the aisle
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If Congressional Republicans want to remain relevant, they better get a few things done -preferably repeal of the ACA and tax reform
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By working with Democrats, Trump eliminates at least three excuses for delaying action on the ACA and tax reform and makes inaction all the more unacceptable to the White House and the public
More broadly, Trump’s deal with Democrats demonstrates he is, at least with respect to eliminating gridlock and keeping his promise to find bipartisan compromise, more in touch with the public than Congress. His actions stand in stark contrast to Congress, and especially the Senate’s yet unrealized promise to repeal the ACA.
All in, the dynamic created by the Trump-Schumer-Pelosi alliance – however temporary – makes the impossible seem plausible.
What next?
The only possibility for repeal, replace and/or reform of the ACA is an amendment to the House-passed AHCA to be offered by Senators Bill Cassidy, Lindsey Graham and Dean Heller. No legislative text has been released but the broad outlines are:
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Creates block grants to states to fund individual market stabilization, among other things
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Retains certain insurance market protections like prohibition on exclusion for pre-existing conditions
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Ends Medicaid expansion, cost sharing reductions and tax credits
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Permits states to convert Medicaid program to per capita or block grant system with additional flexibility
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Expands incentives for use of health savings accounts
Wednesday, the Cassidy-Graham-Heller approach garnered the support of Senator McCain who cast the deciding vote that halted the Senate’s ACA repeal effort in its tracks. Sen. Cassidy has been quoted as saying Majority Leader McConnell would support the effort if there is a CBO score and the necessary budgetary offsets are in place. The Senator envisions the following schedule:
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Legislative text released on Monday Sept. 11
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CBO score released about Sept. 25
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Votes by House and Senate week of Sept. 25
It is worth noting that, procedurally, all the Cassidy-Graham-Heller bills needs to become the Senate version of repeal, replace and/or reform are two Senate floor votes – one to amend the ACHA and one to pass the bill as amended. There are no other obstacles such as committee votes or motions to proceed.
Yes, but (to quote our friends at Axios) what about all the bipartisan talk?
First of all, we think the political establishment and those that write about it so yearn for bipartisanship that they ignore the fact that a few Senate HELP Committee meetings does not compromise make. Although everyone was well behaved this week for the first time in a long time, the same old divisions about single payer and insurance company bailouts persist.
If the Senators on the HELP Committee can agree on a bipartisan bill, it will be very small in scope. Likely provisions are:
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Funding for Cost Sharing Reductions for plan years 2018 and 2019
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An improved waiver process for Section 1332 waivers
Not exactly the sweeping change Trump has promised.
Because the bill is hardly what Trump or America wants, its chances of surviving the House and the president’s desk seem low.
Second, if the nearly impossible happens and a bipartisan bill such as that contemplated by the Senate HELP Committee succeeds, it would not be in conflict with the Cassidy-Graham-Heller amendment. Although we have not seen any legislative text, any major block grant program will need several years to implement. The Senate HELP bill would address more near term concerns of the individual market.
Senate HELP Committee Chairman, Lamar Alexander has set a deadline of the end of next week to develop a consensus bill. If none is forthcoming, the prospects for a Cassidy-Graham-Heller version of ACA repeal, replace and/or reform increase.
We will keep you informed.
Call with questions. We are always here keeping an eye on the World’s Greatest Deliberative Body.
Emily Evans
Managing Director
Health Policy
@HedgeyeEEvans
