New Senate GOP health bill increases subsidies and abandons 2 tax cuts for wealthy

WASHINGTON — Senate Republican leaders on Thursday unveiled a fresh proposal to repeal and replace the health care law, revising their bill to help hold down insurance costs for consumers while keeping a pair of taxes on high-income people that they had planned to eliminate.

With the revised bill, the majority leader, Mitch McConnell, R-Ky., is trying to keep alive his party's seven-year quest to dismantle the health law that is a pillar of former President Barack Obama's legacy.

Republicans said the revised bill would provide roughly $70 billion in additional funds that states could use to help reduce premiums, hold down out-of-pocket costs and otherwise make health care more affordable. The bill already included more than $100 billion for such purposes.

The new bill, like earlier versions, would convert Medicaid from an open-ended entitlement to a system of fixed payments to states. But in the event of a public health emergency, state Medicaid spending in a particular part of a state would not be counted toward the spending limits, known as per capita caps.

In a departure from current law, the bill would allow insurers, under certain conditions, to offer health plans that did not comply with standards in the Affordable Care Act. Under that law, insurers sell regulated health plans through a public insurance exchange in each state.

A summary of McConnell's bill, circulating on Capitol Hill, describes his proposal this way: If an insurer offered "sufficient minimum coverage" on the exchange that remains subject to federal mandates in the Affordable Care Act, it could also offer coverage outside the exchange that would be exempt from many of those mandates.

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Policies that comply with the Affordable Care Act would provide more extensive coverage but would also attract sicker people with higher medical costs. To address this concern, the Republican bill would create a fund to make payments to insurers for the costs of covering high-risk people enrolled in health plans on the exchanges.

Sen. Ted Cruz, R-Texas, has pushed to allow stripped-down plans, and he called the inclusion of the provision "very encouraging."

"I think we're making serious progress towards coming together and unifying our conference and getting a bill that can command the support of at least 50 senators and pass into law," Cruz said on the radio station KFYI.

"I think failing to get this done would be really catastrophic," he added, "and I don't think any of the Republican senators want to see failure come out of this."

People who enroll in catastrophic health insurance plans would be eligible for federal tax credits to help pay premiums. Such plans typically have lower premiums and high deductibles. But under the Affordable Care Act, consumers generally cannot use the tax credits for such plans.

The bill would, for the first time, allow people to use tax-favored health savings accounts to pay insurance premiums. Republicans said this policy change would increase health care coverage.

The bill also provides $45 billion to help combat the opioid abuse crisis — a provision that is particularly important to two Republican senators who opposed the previous version of the bill, Rob Portman of Ohio and Shelley Moore Capito of West Virginia.

The new draft bill would not include any changes from current law to the net investment income tax or the additional Medicare payroll tax paid by certain high-income people. Nor would it change the limits on the tax deductions that insurers can take for salaries and other remuneration paid to top executives.

The Senate is, in effect, trying to catch up with the House, which on May 4 narrowly approved a bill to repeal and replace much of the health care law.

To succeed, McConnell must win over almost all the holdouts in his caucus, a daunting and delicate task given the litany of complaints he faces and the sharp policy differences that he must find a way to bridge.

But the revised bill is broadly similar to the earlier measure that Senate leaders hoped to vote on before the Fourth of July recess, though the new version includes some additional provisions meant to entice reluctant Republican senators with varying policy concerns.

"It appears that little has changed at the core of the bill," the Senate Democratic leader, Chuck Schumer of New York, said on the Senate floor. "The Republican Trumpcare bill still slashes Medicaid. The cuts are every bit as draconian as they were in the previous version — a devastating blow to rural hospitals, to Americans in nursing homes, to those struggling with opioid addiction and so many more."

Like the previous bill, it would end the requirement that most Americans have health coverage, and it would make deep cuts to Medicaid, capping payments to states and rolling back its expansion under the Affordable Care Act. Though some Republican senators expressed concern about how the previous bill would affect Medicaid, Senate leaders stuck with the same approach in the new version.

In a notable change, the bill would keep the two taxes imposed by the Affordable Care Act on people with high incomes: the 3.8 percent tax on investment income and the 0.9 percent payroll tax. The taxes apply to individuals with income over $200,000 and couples with income over $250,000.

Both of those taxes would have been repealed under the previous Senate bill, reducing federal revenue by about $231 billion over a decade, according to the congressional Joint Committee on Taxation.

McConnell is trying to avoid a repeat of his first attempt to push his bill through the chamber, when he was forced to delay a vote planned for late last month because of opposition from Republican senators.

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Already, Sen. Rand Paul, R-Ky., has said he will vote against beginning debate next week, and Sen. Susan Collins, R-Maine, is viewed as likely to vote against it as well, though for different reasons. If one more Republican joined them, the bill could not even be considered.

During debate on the bill, senators are expected to propose numerous amendments on the Senate floor, some of which could modify provisions of the bill affecting Medicaid.

Republicans expect that an analysis of the new bill will be released by the nonpartisan Congressional Budget Office early next week. The previous bill would have increased the number of people without health insurance by 22 million in 2026 compared with the Affordable Care Act, the budget office found.

McConnell has said he intends to take up the revised bill next week, although it is unclear if he would try to move ahead if he did not know for sure whether he had the votes to begin debate — or to ultimately pass the bill.