By Susan Cornwell and Yasmeen Abutaleb
WASHINGTON (Reuters) – Senate Republican leaders released on Thursday a revised plan to dismantle the Obamacare law, playing to the party’s disparate factions by letting insurers sell cheap, bare-bones policies while retaining taxes on the wealthy, but quick criticism showed the healthcare overhaul is already in jeopardy.
U.S. Senate Majority Leader Mitch McConnell, pushed hard by President Donald Trump to pass a healthcare bill and make good on Republicans’ seven-year mission to gut Democratic former President Barack Obama’s signature legislative achievement, is walking a tightrope.
With Democrats united against it, McConnell cannot afford to lose more than two Republican senators to win passage. But moderate Susan Collins and conservative Rand Paul voiced opposition to even bringing the new plan up for debate.
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Several senators said they had concerns about the legislation, particularly its Medicaid cuts, including Shelley Moore Capito, Rob Portman and John McCain. And two other Republican senators, Lindsey Graham and Bill Cassidy, complicated matters by announcing an alternative plan.
McConnell, a skillful tactician who was forced two weeks ago to scrub a planned vote on an earlier version opposed by both moderates and hard-line conservatives in his party, has planned for a vote on the retooled bill next week.
The measure represents a retreat from long-standing Republican aspirations to dump Obamacare-related taxes.
It retains two taxes on the wealthy that helped pay for the Obamacare law that the previous version would have repealed. They are: a 3.8 percent tax on net investment income for individuals earning more than $200,000 and couples earning more than $250,000; and a 0.9 percent surtax for the Medicare insurance program for the elderly on people with those incomes.
It also keeps Obamacare’s limits on corporate tax deductions for executive pay in the health insurance industry.
Its provision allowing insurers to offer stripped-down, low-cost healthcare plans that do not comply with Obamacare regulations to cover certain health benefits, as proposed by Senator Ted Cruz, was aimed at winning over holdout conservatives.
The benefits currently required include maternity and newborn care, mental health services and addiction treatment, outpatient care, hospitalization, emergency room visits and prescription drugs.
Insurer groups, including the national Blue Cross Blue Shield Association, have derided these “skinny plans,” saying they would raise insurance premiums, destabilize the individual insurance market and undermine protections for pre-existing medical conditions. Moderate senators could balk at the provision for the same reasons.
The new bill provides additional funds to help stabilize the individual insurance market, providing $70 billion on top of the $112 billion in the original bill. That would help insurers hold down growth in the cost of insurance premiums and help lower-income insurance holders cover out-of-pocket medical expenses.
“The American people deserve better than the pain of Obamacare. They deserve better care. And the time to deliver that to them is next week,” McConnell said.
The bill retains the previous measure’s phase-out of the Obamacare expansion of the Medicaid government health insurance program for the poor and disabled and sharp cuts to federal Medicaid spending beginning in 2025.
It would still repeal certain Obamacare taxes aside from the taxes on the wealthy, end a penalty on individuals who do not obtain insurance and overhaul Obamacare subsidies to help people buy insurance with tax credits.
Moderate Republicans were spurned in their desire to see a reduction in Medicaid cuts in the revised version.
Critics said despite some changes to coax wavering senators, the revised bill’s core remains unchanged: restructuring and cutting the critical Medicaid social safety-net program, taking away insurance from millions of Americans and driving up healthcare costs for millions of the most vulnerable Americans, especially older people and the sick.
The continuing lack of consensus among Republicans on what to do with Obamacare after calling for its demise since Congress passed it in 2010 with only Democratic votes shows that it is no sure thing that Trump’s party will be able to get the job done.
Healthcare is Trump’s first major legislative initiative. Failure would call into question his party’s ability to govern despite controlling both chambers of Congress and the White House.
MARKET REACTION
Hospital and insurer groups have spoken out against the Senate Republican approach, particularly proposed Medicaid cuts. The cuts would result in lower revenues for hospital companies like Community Health Systems Inc and Medicaid insurance specialists like Molina Healthcare and Centene Corp.
Molina Healthcare, which has more than 1 million customers on the Obamacare individual exchanges and manages Medicaid health programs, said that as a result of the proposed changes in the individual market, insurers would compete for the least risky customers, making plans for sick people unaffordable and destabilizing markets.
Healthcare stocks were mostly unmoved by the announcement, as Wall Street analysts described the core of the revised bill as largely unchanged from the earlier one.
The new bill includes another $45 billion for fighting the opioid addiction epidemic that has hit large parts of the nation, on top of the $2 billion in the earlier version.
The nonpartisan Congressional Budget Office, which forecast that the previous version would have increased the number of Americans without health insurance by 22 million by 2026, is due to evaluate the new bill in the coming days.
The Affordable Care Act, dubbed Obamacare, expanded health insurance coverage to some 20 million people, in large part by expanding Medicaid.
Repealing and replacing Obamacare, which Republicans fault as a costly government intrusion into the healthcare system, was a top campaign promise for Trump, who was monitoring the Senate developments during his visit to France.
“I’d say the only thing more difficult than peace between Israel and the Palestinians is healthcare,” Trump told reporters on his flight to France.
The House of Representatives on May 4 passed its own version of healthcare legislation.
Republicans have a 52-48 Senate majority, with Vice President Mike Pence able to cast a potential tie-breaking vote. Any bill passed by the Senate would have to go back to the House for approval.
The alternative offered by Graham and Cassidy would redirect much of Obamacare’s federal funding for health insurance to states.
(Additional reporting by Ayesha Rascoe, Yasmeen Abutaleb, Caroline Humer, Eric Walsh, Lewis Krauskopf and Richard Cowan; Writing by Will Dunham; Editing by Jonathan Oatis and Leslie Adler)
