Senate Republicans have been meeting in private to find a path to 50 votes to support legislation to repeal and replace the Affordable Care Act (ACA), following the House passage of the AHCA on May 4.   Senate Majority Leader Mitch McConnell (R-KY) appointed a 13 member working group to develop the legislation but acknowledges that all 52 Senate Republicans are critical to this effort.  As Senator Roy Blunt (R-MO) notes, developing a bill that 46 or 47 Senators can support is “pretty easy,” but “getting to 50 [is] a challenge.” 

Once the Congressional Budget Office (CBO) releases its score of the AHCA on May 24, the Senate Republicans will begin writing a bill in earnest.  The Senate Parliamentarian will use the CBO score to review the legislation to determine whether it complies with “Byrd rule” requirements for budget reconciliation legislation.

Named for its author, the late Senator Robert Byrd (D-WV), the “Byrd rule” disallows “extraneous matter” from being included in a reconciliation bill.  “Extraneous matter” broadly means provisions that do not relate to the deficit reduction goals of the budget reconciliation process. 

According to Senator Orrin Hatch (R-UT), chairman of the Senate Finance Committee, discussions are underway to keep much of the ACA in place until 2020, including keeping many of the taxes, retaining the individual mandate, and continuing cost-sharing reductions through 2018, to ensure insurers do not abandon individual markets. 

Perhaps the biggest challenge to a Senate repeal and replace bill is how such legislation treats the Medicaid program.   The House-passed AHCA cuts $800 billion over 10 years from the program and phases out Medicaid expansion beginning in 2020.  Of the 20 Senate Republicans who represent states that expanded Medicaid under the ACA, Senators Rob Portman (R-OH), Lisa Murkowski (R-AK), Shelley Moore Capito (R-WV), and John McCain (R-AZ) have each signaled concerns with the House approach.  Alternate proposals include a more gradual phase out of Medicaid expansion, phasing out over five years starting in 2020, or potentially less severe Medicaid cuts. 

Certain other ACA provisions, including retaining protections for individuals with pre-existing conditions, are critical to the support of other Republican Senators.  Senator Bill Cassidy (R-LA), a gastroenterologist, has stated that he cannot support a bill that results in individuals with pre-existing conditions unable to afford health insurance. 

Senators Cassidy and Susan Collins (R-ME) have coauthored an alternative repeal and replace proposal, which would repeal the individual and employer mandates and give state more flexibility to build their own health care systems.  They have engaged in discussions with moderate Democratic Senators to determine whether there might be an opportunity for a bipartisan opportunity for health care legislation.

While state governors are divided on the AHCA approach to Medicaid, several governors are working to make bipartisan recommendations to address the individual health insurance market.  Governors John Kasich (R-OH) and John Hickenlooper (D-CO) are leading the effort to propose a consensus approach to stabilize the individual market and give states more control.  To the extent that these solutions do not relate to budget deficit reduction goals of the reconciliation process, and would be ruled by the Senate Parliamentarian as “extraneous matter,” they would need to be considered outside of the budget reconciliation process to repeal and replace the ACA, and accordingly would require support from Democrats to pass the Senate.  

Also related to the short term stability of the individual market, today the Trump Administration and the U.S. House of Representatives jointly requested an additional 90-day delay in the lawsuit related to ACA insurance subsidies, now House v. Price (formerly House v. Burwell) available here.  While this filing does not give insurers the certainty they have been seeking, it is positive that the Administration did not immediately stop payment of the subsidies, as President Trump had suggested.  A HHS spokesperson noted that “Congress could resolve any uncertainty about the payments by passing the AHCA and reforming Obamacare's failed funding structure.”