On May 24, the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) released much-anticipated analysis of the House-passed American Health Care Act (AHCA). Overall, CBO projected that the AHCA would reduce the federal deficit by $119 billion over the 2017 – 2026 budget window and result in 23 million additional uninsured people by 2026. See Baker Donelson's full overview of CBO's analysis and comparison to previous AHCA scores here.

Of particular note, CBO examined the AHCA provisions to allow states to waive requirements for essential health benefits (EHBs) and community-rating, two amendments considered crucial to securing needed votes for AHCA's passage in the House. Starting in 2020, CBO predicts that the non-group markets in states that elect to fully waive these provisions would become unstable for people with higher-than-average expected health care costs. This effect would arise because CBO expects that community-rated premiums would increase over time, eventually pricing people who are less healthy (including those with preexisting or newly acquired medical conditions) out of the market – despite the additional funding available under AHCA to help reduce premiums.

On June 13, the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary released its analysis of AHCA, projecting that the bill would reduce the federal deficit by $328 billion over the 2017-2026 budget window and result in 13 million additional uninsured by 2026. On Medicaid, CMS estimates 8 million fewer enrollees by 2026, due to a decline of 6 million for newly eligible adults under current law and a decline of 2 million for all other Medicaid enrollees.

Recognizing the challenges presented by CBO's latest report, Senate Republicans have sought to manage expectations regarding the health care reform legislation. Republicans only need 50 votes under the budget reconciliation process to pass a bill (with Vice President Mike Pence breaking the tie). However, reaching this threshold is complicated by the fact that some moderate and conservative Republican Senators remain deeply divided over various provisions of the House-passed legislation, including the age-adjusted tax credits, funding cuts to the Medicaid program and state waivers of protections for individuals with pre-existing conditions. In addition, many major stakeholders have announced opposition to the House-passed AHCA—including AARP, the American Cancer Society Cancer Action Network, American Diabetes Association, American Heart Association, American Hospital Association, American Medical Association, and the Federation of American Hospitals—raising the stakes for Senate considerations to modify AHCA’s approach. Illustrating the complexity and pressure of negotiations to bridge these divides, Senate Majority Leader Mitch McConnell (R-KY) stated on May 24, "I don’t know how we get to 50 [votes] at the moment. But that's the goal. And exactly what the composition of that [bill] is I'm not going to speculate about because it serves no purpose."

Senate Majority Leader McConnell has pledged to bring a bill to a vote by the July Fourth recess and initiated the so-called "Rule 14" process that allows the Senate to fast track the legislation, bypassing the Senate Committees and placing it directly on the floor for consideration. After a June 7 closed door meeting to review the latest proposals under development, Senator Bill Cassidy (R-LA), a key moderate in the ACA repeal and replace debates, reported feeling "increasingly comfortable and very encouraged" by Republicans' plans. After meeting with Republican congressional leaders on June 8, President Trump signaled his support and urged Republicans to move on an aggressive timetable for repealing the ACA in order to quickly turn to tax reform. In addition to timeline pressures from the legislative agenda, outside calls for clarity on Senate Republicans’ health reform bill will likely come even sooner—as insurers in the ACA’s exchanges face a June 21 federal filing deadline to determine whether they will participate for 2018. However, even as news reports indicate that Senate Republicans are potentially reviewing policies with the CBO for analysis this week, Senate Republicans have not indicated when they plan to publicly release legislative text under consideration.

Some Republican Senators, such as Senator Richard Burr (R-NC) and Senate Health, Education, Labor and Pensions (HELP) Committee Chairman Lamar Alexander (R-TN), have emphasized the need for short-term market stabilization policies if broader health care reform efforts stall. Senator Burr stated on June 1, “I think it’s unlikely we will get a health care deal, which means that most of my time has been spent trying to figure out solutions… and things that we can bring to the table that both aid the exchange market or transition it to something that's life after the Affordable Care Act.”

Takeaway: The overall timeline, process and policy components of Senate legislation on health care reform remain largely in flux. Any Senate legislation needs to be provided to CBO approximately two weeks prior to a final vote to allow CBO analysis to ensure that the provisions conform to the Senate's rules of budget reconciliation. If Senate Republicans do not coalesce around a plan soon enough for a July 4 vote, it is likely that the process of negotiations would continue throughout the summer.