Crunch Time for Senate Republicans on Healthcare Reform  

Congress returns this week from its Memorial Day recess with Republican Senate leaders facing growing uncertainty over whether they can pass ACA repeal-and-replace legislation. The House-passed American Health Care Act, which barely cleared that chamber in May, doesn’t have enough support to pass the Senate, where Republicans are working on a bill of their own. To pass a Senate measure, however, GOP leaders can afford to lose only two votes.

Getting consensus is complicated by political blowback from the Congressional Budget Office’s (CBO) revised analysis projecting that the House-passed bill will cause 23 million people to lose coverage by 2026 (compared to projected coverage under the ACA) and dramatically increase costs for some older people and those with pre-existing health conditions. Senators have been meeting privately for weeks to weigh their options and are considering ways to address those concerns by, among other things, adding protections for people with pre-existing health conditions, providing more generous tax credits to help people buy coverage, and revisiting the House bill’s plan to end the ACA’s expansion of Medicaid.

But including such changes in a Senate bill won’t be easy given differences between conservative and moderate Republicans. In addition, the cost of such changes could run afoul of budget rules on fiscal savings under reconciliation, which allows Republicans to sidestep the Senate’s 60-vote threshold. While raising revenue by capping the employee tax exclusion for employer-provided coverage is under discussion as one way to address the problem, the idea – which was rejected by the House – faces fierce opposition from employer and labor groups.

Meanwhile, employers are actively lobbying for repeal of the Cadillac tax and the employer mandate, simplified reporting requirements, greater flexibility for HSAs and other health care accounts, strengthened ERISA protections for multi-state employers, clearer rules governing wellness plans, and eased restrictions on electronic distribution of plan documents.

Republicans are reportedly close to releasing an early draft of legislation, and although leaders have avoided putting deadlines on the process, Majority Leader Mitch McConnell, R-KY, wants to pass a bill before the July 4 recess. That would give Republicans one month before the August recess to merge House and Senate bills, which are expected to have major differences. But with key policy divisions still unresolved within the Senate GOP caucus, there is skepticism about that timetable. If the Senate can’t pass legislation by the August recess, GOP leaders will likely end the health reform debate and move on to tax reform.