June 22, 2017

With a little over a week remaining before the July 4 recess, Capitol Hill was bustling with legislative activity on issues ranging from child welfare to forest management to flood insurance and more.  However, the highly anticipated release of the Senate’s health care reform legislation on June 22 took center stage.  Although the vast majority of GOP members are just seeing the bill text for the first time, Senate Majority Leader Mitch McConnell (R-KY) has indicated that the legislation will be considered on the Senate floor sometime next week.

The package, which was crafted behind closed doors by a small group of Republican senators, would repeal and replace the Affordable Care Act (ACA).  Entitled the Better Care Reconciliation Act, the discussion draft is similar to the House-passed American Health Care Act (AHCA; HR 1628).

Medicaid Cuts

Expansion Funds Phased Out: Under the Senate approach, the ACA’s enhanced federal Medicaid matching rate would be phased out over the course of four years – from 90 percent in 2020 down to 75 percent by 2023 – with expansion funds terminating on January 1, 2024.  By way of comparison, the House legislation would end the current 95 percent enhanced match on January 1, 2020.

Per Capita Cap: The underlying Medicaid program would be converted to a per capita cap, with even deeper cuts in future years compared to the House bill.  Under the Senate proposal, the per capita cap would begin on October 1, 2019, with States able to choose a consecutive two-year period of Medicaid expenditures for the U.S. Department of Health and Human Services to use when calculating the federal payment limit.  The House bill would establish fiscal year 2016 expenditures as the base year for calculations.

Starting in fiscal year 2025, the federal contribution to Medicaid would be reduced even more than the House bill by pegging the federal spending at a growth rate tied to the consumer price index, instead of medical inflation. The projected two percentage point difference would accelerate the cuts over time.

Coverage of Pre-existing Conditions Protected

Unlike the AHCA, the Senate bill would not change the current law requirement that insurance plans cover pre-existing conditions.

Opioid Funding Increased

The Senate bill would provide $2 billion in fiscal year 2018 to states to provide disorder treatment and recovery support services for individuals with mental or substance use disorders, including addiction to opioids.

Public Health Fund Eliminated

As anticipated, the Senate repeal measure – like the AHCA – would repeal the Prevention and Public Health Fund.  The fund is used by the state and local public health departments to reduce infectious disease and to respond to other public health issues.  In fiscal year 2017, the fund allocated $931 million for those efforts.

Outlook

Senate Majority Leader McConnell intends to bypass committee hearings and markups and bring the bill to the floor as early as Monday, June 26, with a final vote expected on Thursday, June 29.  Before the final vote, the Congressional Budget Office (CBO) must provide the upper chamber with a cost estimate of the bill, as well as a projection on the number of individuals who would lose health coverage.  Three weeks after the House passed the AHCA, the CBO estimated that the legislation would result in 23 million individuals losing coverage, including 17 percent of those on Medicaid.  All told, the CBO indicated that the federal contribution to Medicaid would be cut by 25 percent if the AHCA were enacted into law.

Whether there are enough votes to pass the Senate bill remains an open question.  Given the 52-48 split in the upper chamber, and in light of united opposition from Democrats, the legislation would fail if more than two Republicans were to reject the measure. 

As of this writing, it does not appear as though Republicans have sufficient support from their caucus to pass the bill.  However, the legislation remains in draft form, meaning it may be modified by GOP leaders in the coming days in an attempt to secure the necessary votes to clear the legislation.

Gte more news from Washington in our Federal Issues Update.