Senate Republicans are weighing a two-step process to replace Obamacare that would postpone a repeal until 2020, as they seek to draft a more modest version than a House plan, which would undermine some insurance markets, according to some nonpartisan analysts.

Republicans who are in the early stages of private talks on the Senate plan say they may first take action to stabilize premium costs in Obamacare’s insurance-purchasing exchanges in 2018 and 2019. Major insurers have said they will leave the individual market in several states, including North Dakota, Iowa and Missouri.

Top congressional Republicans are unveil their framework for tax reform at the U.S. Capitol.
Top congressional Republicans are unveil their framework for tax reform at the U.S. Capitol. Joe Sohm

A Senate plan is likely to continue subsidies that help low-income Americans with co-pays and deductibles, said third-ranking Republican John Thune of South Dakota. White House budget director Mick Mulvaney said Thursday the administration hasn’t committed to paying subsidies due in June, which would create additional uncertainty for insurers as they set rates for next year.

“There clearly has to be a short-term solution that works with the transition until some of our long-term policy changes can take effect,” Thune says. “There’s got to be certainty in the marketplace.”

The private Senate GOP negotiations include a 13-member leadership-controlled working group as well as almost daily closed-door discussions among all Senate Republicans. In addition, Republican Senator Susan Collins of Maine has convened bipartisan talks with about a dozen senators.

Republicans in the Senate are stepping up their efforts to build consensus after the nonpartisan Congressional Budget Office said Wednesday that the House plan, which was narrowly passed May 4, would result in 23 million more people without insurance; and, in some states, plans would be too costly for older or sicker people, the CBO analysis contends.

Democrats in both chambers are united against efforts to replace the 2010 Affordable Care Act and said yesterday the CBO assessment provides added ammunition for the Senate fight. Senate Minority Leader Chuck Schumer, of New York, said the report should be the “final nail in the coffin” in the Republican drive to end Obamacare.

“The report makes clear: Trumpcare would be a cancer on the American healthcare system, causing costs to skyrocket, making coverage unaffordable for those with pre-existing conditions and many seniors, and kicking millions off their health insurance,” said Schumer.

A Quinnipiac University national poll released Thursday said 57 percent of Americans voters disapprove of the House measure, compared with only 20 percent that support it. The May 17-23 poll of 1,404 voters had a margin of error of plus or minus 3 percentage points.

Senate Republican leaders say they expect to try to pass a bill with only GOP votes. The party controls the Senate 52-48, and the parliamentarian will determine which parts of a bill could advance under streamlined procedures that can pass with 50 votes plus Vice President Mike Pence’s tie-breaker.

Whether the GOP can attract 50 votes remains to be seen. Senators have indicated the talks have spent little time on perhaps the toughest issue: How to pay for a plan that would cover more people and offer lower premiums than the House bill. That would require retaining some of about $800 billion in Obamacare taxes the House measure repeals, or finding other cost savings in the federal budget.

“I think we ought to try to look for savings anywhere we can find them,” said Senate Finance Committee Chairman Orrin Hatch, a Utah Republican. “But my experience is that we don’t find many savings.”

The subsidies for low-income insurance customers total about $7 billion a year. BlueCross BlueShield of North Carolina announced Thursday that it would raise its rates on average by 22.9 percent next year—but if the subsidies were funded, the increase would be 8.8 percent, according to Brian Tajlili, the insurer’s head of actuarial and pricing services.

The health insurer has seen results from Obamacare plans improve markedly after raising rates, but the uncertainty from Washington is threatening those gains. “We’re seeing the market begin to stabilize after three years of coverage,” Tajlili said in a statement.

Senate Republicans say there is a growing consensus that they want a slower phase-out of Obamacare’s expansion of Medicaid health coverage for the poor than in the House bill, which would cut the program by about $800 billion. Senators from states that elected to take advantage of the Medicaid expansion, including Rob Portman of Ohio, want a several-year phase-out to avoid a “cliff” that would occur if the expansion ended in 2020, as the House bill reqiuires.

Republican Senator John Hoeven of North Dakota, a member of the 13-person working group, said the longer phase-out has some support, as well as a proposal to give states more flexibility to shape their own approaches under Medicaid. He said there’s some early interest in his idea to enable states that achieve Medicaid cost savings to retain the money as a rainy-day fund for future years. “Then if they have a bad year they draw on those savings,” Hoeven said.

Meanwhile, Republicans including Lamar Alexander of Tennessee and Thune are addressing the affordability of individual coverage on the insurance exchanges, including the tax credits available to consumers. Thune said there is momentum behind his idea of ensuring that tax credits are based not just on age, as the House bill allows, but also on income levels.

“I think they did some things with the tax credit that we would want to refine and change,” Thune said. “If that’s how you want to cover the people who aren’t eligible for Medicaid but can’t afford to buy insurance on the individual marketplace on their own, you have to have a mechanism to do that.”

Members of the 13-member working group and in Collins’ group say there is little interest in using state-run high-risk insurance pools to cover the chronically ill and those with pre-existing conditions. The House bill allows states to opt out of Obamacare’s ban on higher premiums for those with pre-existing conditions if they provide high-risk pools, with federal funding help.

Because of evidence that high-risk pools are expensive and have been underfunded, Senate Republicans say they’re weighing using reinsurance instead. That approach would provide money to individual-market insurers to help pay for high-cost customers, which represents an effort to discourage insurers from setting higher premiums for those people.

“High-risk pools have not had a stellar record,” said Senator Bill Cassidy, a Louisiana Republican who is part of the bipartisan negotiations. “I think reinsurance is a better way to go.”

Senators say they’re examining the idea of automatically enrolling people who lack coverage into private insurance plans and are seeking advice from outside groups about whether that’s a good replacement for Obamacare’s mandate that people have insurance or pay a penalty. “We haven’t figured out exactly how you identify people and get them auto-enrolled,” Thune said. “I think that would be a challenge, but it’s certainly an idea that’s of interest to me.”

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