McConnell seeks to win over GOP holdouts with new health bill

(Bloomberg) -- Senate Republicans’ revised proposal to replace Obamacare would provide an added $70 billion to stabilize insurance exchanges over a decade compared with an earlier version, according to a summary of the plan obtained by Bloomberg News.

The change comes on top of $112 billion provided for the same purpose in an earlier measure by Senate Majority Leader Mitch McConnell. That effort stalled two weeks ago due to a lack of support from rival moderate and conservative Republicans.

The new measure, to be released to all Senate Republicans later Thursday morning, also discards earlier plans to repeal three Obamacare taxes on the wealthy, according to the summary. That move effectively freed up about $230 billion in cash to bolster health expenditures.

The revised bill also includes a provision that would allow people for the first time to use health savings accounts to pay insurance premiums, according to the document.

The taxes that will be retained include a net investment income tax on high earners and a Medicare surcharge on the wealthy. The changes also remove a tax break for health-insurance executives’ pay.

McConnell of Kentucky is trying to find a narrow path to satisfy moderates within his party without alienating conservatives, who support deep spending cuts. Republicans on Wednesday said leaders hadn’t told them yet which components of the U.S. health care system will benefit.

“I want to see how funds are used to help ensure that people can get access to affordable coverage, and that’s the key,” said Senator Rob Portman of Ohio, who objected to McConnell’s original bill. “But we don’t have the specifics."

Republicans are planning to include in the health bill a version of an amendment proposed by Republican Senator Ted Cruz of Texas and GOP Senator Mike Lee of Utah, a person familiar with the plan said.

Basic Plans

Cruz and Lee want to allow insurers to offer cheap, bare-bones plans alongside those that meet the more comprehensive coverage requirements of Obamacare. Critics in both parties say the proposal would essentially put people with pre-existing conditions in the Obamacare insurance pool and allow young, healthy people to buy cheaper plans in a separate pool.

But Lee wrote in a tweet Thursday morning that he hasn’t seen the new language of the amendment added to the bill and is "withholding judgment."

Republican leaders asked the CBO to provide an analysis with, and without, the provision.

Cruz said Thursday he won’t vote to let the health bill advance unless his proposal, or something very similar, is sent to the full Senate.

“The bill will not have the votes to go forward if there are not meaningful protections for consumer freedom that significantly lower premiums,” Cruz told reporters.

But health insurers have said the plan backed by Cruz would destabilize the insurance market and undermine protections for sick people. The BlueCross BlueShield Association called the Cruz plan “unworkable.”

America’s Health Insurance Plans, the industry’s main lobbying group, said his proposal would hurt the market by dividing healthy and sick people into separate groups. The sick people, AHIP said, would face extraordinarily high premiums, or might not be able to find coverage.

For the overall measure to pass, and Republicans to live up to their promise to eliminate President Barack Obama’s signature domestic accomplishment, they can lose no more than two GOP votes from their 52-48 majority amid unanimous Democratic opposition.

Bipartisan Discussion

Without having seen McConnell’s latest plan, more than half a dozen Republican and Democratic senators have discussed alternatives -- a bipartisan approach that would infuriate conservatives and probably would be a hard sell in the House, where lawmakers in May passed their own plan to gut Obamacare.

After the bill is released and scoured by the Congressional Budget Office, it will become clearer whether Republican leaders have found a balance between moderates’ desire for more spending for Medicaid and subsidies for Obamacare’s insurance exchanges, and conservatives seeking a smaller government role in health care.

“There’s a lot of different viewpoints, a lot of different feelings about it and they all have to be taken into consideration if you want to put together enough votes to pass the doggone thing,” said Senate Finance Chairman Orrin Hatch, a Utah Republican.

Paul Objects

GOP Senator Rand Paul of Kentucky, a Tea Party stalwart, said Wednesday he will oppose the new measure and vote to block it from floor consideration -- without having seen the legislation. That means Republicans can lose support from only one more of their members.

“The new bill looks a lot like the old bill except it spends more money, taxes more and does little to assuage the concerns of conservatives,” Paul told reporters. “At this point, I cannot support the bill.”

As part of a drive to lure other support with more health funding, Republican leaders will retain several Obamacare tax increases, a reversal from the earlier measure, according to a GOP aide familiar with the plan. That includes Obamacare’s 3.8 percent tax on net investment income for people who earn more than $200,000 and couples with incomes over $250,000, as well as a 0.9 percent Medicare surtax on the same incomes.

The plan will also scrap a tax break for health-insurance executives’ pay, the aide said, keeping an Obamacare provision allowing health insurance companies to deduct from their taxes $500,000 of the pay of each top official. That’s a tougher restriction than the limit imposed on other companies, which is $1 million per executive.

Those changes are designed to address concerns of moderates, including Bob Corker of Tennessee and Susan Collins of Maine, after Democrats and other critics said the earlier version cut taxes for the wealthy at the expense of low-income and sick people. The three tax items produce a revenue stream of nearly $232 billion over a decade.

Medicaid Concerns

Collins said the Medicaid funding in McConnell’s earlier proposal, which the CBO said amounted to a cut of $772 billion from current projections over a decade, would hurt rural hospitals in her home state and others. Portman, whose home state of Ohio took advantage of Obamacare’s Medicaid expansion, is among those concerned about funding levels and how the expansion is phased out. Corker is among those who want more generous subsidies for people buying individual policies on insurance exchanges.

Republican leaders have considered boosting market stabilization funds for the exchanges. McConnell’s earlier proposal provided $50 billion over four years to bolster insurance markets, in addition to cost-sharing subsidies to insurers covering lower-income people. It also included a state innovation pool of $62 billion over eight years that would allow funding for high-risk pools, reinsurance and other items.

Republican leaders already have made clear the measure will have some provisions demanded by some moderates, including $45 billion sought by Portman and Senator Shelley Moore Capito of West Virginia to address opioid addiction.

Meanwhile, the balancing act with conservatives is at least as tough. Outside groups that promote small government and low taxes, including the Club for Growth and Tea Party Patriots, are keeping the pressure on Republicans to simply repeal Obamacare and replace it later.

“Failure is not an option,” said Jenny Beth Martin, president and co-founder of Tea Party Patriots. “This is what the voters voted for them to do.”

Bloomberg News