House Republicans were celebrating on May 4 after passing the American Health Care Act (AHCA), albeit by a narrow 217-213 margin. Republican lawmakers have been promising to repeal and replace the Affordable Care Act (ACA) since it was enacted seven years ago.
But on the other side of the Capitol building that afternoon, Republican senators were rolling up their sleeves. The Senate is a different chamber with different rules and philosophies that do not always align with those of their colleagues in the House. The fate and final contours of the AHCA are yet to be determined.
Within an hour of the House vote, Senate Finance Committee Chairman Orrin Hatch (R-Utah) issued the following statement on the passage of the AHCA:
“….As we work to fulfill our promise to our constituents to repeal and replace the law in the Senate, we will be guided by the important principles to address costs and give American families more choices. At the same time, we will be working to put together a package that reflects our members’ priorities with the explicit goal of getting 51 votes. Coupled with the constraints imposed by the budget reconciliation process, we must manage expectations and remain focused on the art of the doable as we move forward.”
House Republicans used the budget reconciliation process for the AHCA, which allows the Senate to consider and pass the bill by a simple majority of 51 votes, rather than the 60 generally needed to bring legislation to a vote under Senate rules. It is unlikely that any Democrats will defect, which means Senate Republicans will need to stand together to meld a diverse set of policy views for their members, and stay within the confines of the budget rules. The reconciliation rules are strict and require that legislation be limited to issues tied to the federal budget deficit, taxes or the federal debt limit. The rules tie the Senate’s hands from making substantive policy changes they might otherwise like to pursue.
So what happens next?
Legislative consideration of the AHCA is not expected in the Senate until the Congressional Budget Office (CBO) releases its analysis of the bill’s impact on the federal budget deficit and health insurance coverage. On March 13, the CBO estimated that enacting the AHCA would reduce federal deficits by $337 billion over the coming decade and increase the number of people who are uninsured by 24 million in 2026 relative to current law. The updated CBO score, which will include recently added amendments to the House bill, is due out this week or next. The House version of the AHCA could give senators increased pause if the CBO determines the AHCA would cause premiums to increase further and would lead more people to go without health insurance.
After the CBO score is released, the Senate parliamentarian will sift through the legislation, line-by-line, and determine what can be included in the reconciliation bill and what needs to be removed according to the budget rules. For example, House provisions such as changes to the essential health benefits and pre-existing conditions will be examined to determine if they are “policy changes” or if they are allowable within the budget rules by having an effect on taxes or federal revenue.
After that process, the Senate Republicans will seek to draft a “substitute amendment” to the AHCA that can be brought to the Senate floor. While Senate Democrats are not expected to support the bill, they do have a critical role to play. The Democrats can state their case to the Parliamentarian that certain provisions violate Senate rules and should be removed. This could also lead to changes to the bill and wrenches in the Senate process.
If a revised version of the AHCA is passed by the Senate, the House and Senate may choose to go to a conference committee to work out their differences. But equally likely, and in order to speed the process along, the House may simply take up the AHCA as amended by the Senate and pass it on an up-or-down vote. The AHCA would then go to the president for signature into law.
I doubt we will know what is in or out of the bill until early June, and the earliest I expect a Senate amended AHCA could be ready for a vote would be just before the July 4 Congressional recess. If a vote does not happen then, the next backstop is the August recess. However, the Senate is likely motivated to move quickly because they are eager to move on to other issues this year such as the 2018 budget process, tax reform, and other major expiring health provisions.
What policy changes can we expect in the Senate?
Due to the budget rules by which the Senate must abide by, it is important to keep in mind that the AHCA is, in essence, a redistribution of federal dollars to provide coverage in the commercial insurance markets and through the Medicaid program, and that the final bill must reduce the federal deficit. The rules do not allow a complete rewrite or repeal of the ACA. I tend to think of the AHCA provisions in four major buckets: the federal premium assistance tax credits, Medicaid financing, funding for state pooling mechanisms, and the taxes and fees used to offset the federal spending and reduce the deficit. The Senate will have strong views on how the federal dollars should be dialed up or down to create what they believe is the most efficient way to expand coverage and lower premiums.
As we watch these developments over the course of 2017, it becomes clear that the legislative process does not always align well with the need for stakeholders to make decisions. Despite the uncertainty around the fate and final version of the AHCA, states and health plans are moving ahead with decisions around their participation, rates and enrollment processes for the 2018 plan year.
One major unresolved issue for the remainder of the 2017 plan year (as well as 2018) is the fate of the federal cost-sharing reductions (CSRs) under the ACA – subsidies that are paid directly to insurance carriers for decreasing out-of-pocket expenses for low-income exchange enrollees. The funding for these subsidies has been in the courts since 2014 when House Republicans filed a lawsuit against the Obama administration, contending the subsidies were unlawful because Congress has never appropriated the funding. The issue may be resolved by the courts, or by Congress if it steps in to appropriate the funds. Late last month, the White House signaled that it would let CSRs continue for a period of time. The Court is expected to resume consideration of the case this month. The next time Congress will consider a federal appropriations bill will be in September as they enter a new fiscal year. I expect this issue to be in play for the next several months for health plans and patients.
Thus, as we enter the Senate debate, I understand the need to manage all of our expectations for this year in health care. The “art of the doable” means the Senate is about to enter a very delicate political, procedural, and policy journey.