GOP considers concessions to both sides
WASHINGTON» The Republican debate over how to overhaul the Affordable Care Act turned sharply Thursday to a divisive and ideological question: How much money should the Senate health care bill spend on protecting vulnerable Americans, and how much on providing tax relief to the wealthy?
Senate Majority Leader Mitch McConnell, R-Ky., in an effort to strike a balance between centrists and conservatives, is now making concessions to both factions of his caucus, according to lawmakers and aides.
But this effort was complicated by a new Congressional Budget Office estimate Thursday finding that the Republican plan to change how Medicaid payments are calculated starting in 2025 would lead to significantly deeper reductions in its second decade than at the end of the first decade.
By 2036, the new analysis says, the government would spend 35 percent less on Medicaid than under the current law, compared with a 26 percent decrease in the first decade.
McConnell is rewriting his proposal to provide more money for opioid treatment and assistance to low- and moderate-income Americans, in part by potentially preserving a 3.8 percent tax on investment income provided under the Affordable Care Act that the current draft of the Senate bill would repeal. At the same time, the new draft aims to placate the right by further easing the existing law’s insurance mandates and providing higher tax deductions for the healthsavings accounts that conservatives favor, Republicans said.
It remains unclear whether these changes, if adopted, would garner enough support for the bill to pass. But they may represent the most viable path forward if Republicans want to rewrite the 2010 health law known as Obamacare without any help from Democrats.
“We will, it appears to me, address the issue of ensuring that lower-income citizens are in a position to be able to buy plans that actually provide them appropriate health-care,” said Sen. Bob Corker, R-Tenn. “And with that, my sense is that the 3.8 percent repeal [in the current draft] will go away.”
The 3.8 percent tax applies only to individuals making over $200,000 a year, and married couples earning more than $250,000. Repealing it as of Dec. 31, 2016, as the bill does now, would cost the federal government $172 billion in revenue over the next 10 years, according to a recent CBO analysis.
The updated Medicaid estimate from the CBO, which shows how spending would shrink over the next 20 years, underscored the extent to which McConnell’s plan would squeeze the longstanding public insurance program.
The current draft already cuts $772 billion over 10 years from Medicaid, which covers poor Americans as well as the elderly, children and pregnant women.
The updated analysis, requested by Sen. Ron Wyden, D-Ore., and other Senate Democrats, calculated the impact of pegging the program’s inflation rate to the Consumer Price Index for urban consumers, as opposed to the medical inflation rate.
With senators leaving town Thursday for a 10-day break over the July 4th holiday, Republicans are not likely to announce any new deal or unveil full legislation until after their return next month. That would give time for the CBO to analyze the new proposals and for senators to hear from constituents, setting up a few more days of haggling when they return July 10 with a vote possible the week after that.
Corker, who met with GOP leaders Wednesday, said he believes “the route being pursued” is to preserve the tax and use that money to provide subsidies for lower-income people.
He added that he voiced directly to President Donald Trump his unease with the idea of slashing taxes for the wealthy while “increasing the burden” on lower-income Americans.
Minutes later, Senate Majority Whip John Cornyn, R-Texas, acknowledged that keeping the tax was being discussed, but he underscored that no final decision had been made.
In a sign of the sharp disagreements that continue to plague Senate Republicans, Sen. Patrick J. Toomey, R-Pa., disputed Corker’s notion that the tax cut would be jettisoned, calling the proposal a “very bad idea.”
“I’m not at all convinced that that’s where it’s going,” Toomey said.
Sen. Tim Scott, R-S.C., said that while he thought it was a bad idea to use the investment tax to help fund the ACA’s existing programs, lawmakers may need to keep the tax. Scott said there is clear pressure from at least three senators to preserve it, and their votes are critical to passing the bill.
“Keeping it now is a whole new conversation,” Scott said. “particularly when you have three senators already heading in that direction.”
The dispute underscores the challenge Senate leaders face as they reexamine the tax portion of their Better Care Reconciliation Act. One bit of wiggle room in their negotiations is the CBO’s analysis of the bill’s impact on the federal deficit, which allows them to spend as much as $198 billion without violating Senate budget rules.
The draft bill that stalled this week would phase out the program’s expansion under the ACA over three years and rein in spending on the overall program, especially starting in 2025. It would also repeal or delay $541 billion in taxes, primarily on wealthy Americans and insurers.
The measure eliminates every tax imposed under the ACA except the “Cadillac” tax on employers offering generous health plans. That tax is suspended until 2026 to comply with congressional budget rules.
The move to cut Medicaid, which covers nearly 70 million Americans, helps offset the bill’s generous tax cuts. But it has generated significant opposition.