Washington Healthcare Update

May 11, 2017

Pardon Our Dust

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On May 4, the House of Representatives passed by a narrow vote of 217-213the American Health Care Act (AHCA), which repealed and replacedsignificant portions of the Affordable Care Act (ACA). House Democratsunanimously opposed the legislation. Twenty Republicans also voted againstthe legislation.

It is highlyunlikely that the Senate will pass the House-approved bill. At best, itbecomes a starting point for discussions, and it may not even be that.

The Senate and Timing

Senate Republican leaders have already signaled that the process will notbe rushed. The expiration of the FY2017 budget reconciliation instruction,which will occur once a new FY2018 resolution is enacted or at the end ofthe fiscal year (9/30/17), is the only deadline for getting the repeal billto the president. Some members have suggested it might take two months ofdeliberations in the Senate. The truth is no one knows how long the Senatemight take.

The Process in the Senate

Senate Republican leadership created a special working group to develop aproposal. The working group is comprised of leadership, relevant committeechairs and other members. From leadership are Sens. McConnell of Kentucky,Cornyn of Texas, Thune of South Dakota and Barrasso of Wyoming. Committeechairs participating on the working group include Sens. Alexander ofTennessee (Health, Education, Labor and Pensions Committee); Enzi ofWyoming (Budget Committee); and Hatch of Utah (Finance Committee). Othercommittee members are Sens. Cruz of Texas, Lee of Utah, Cotton of Arizona,Gardner of Colorado, Portman of Ohio and Toomey of Pennsylvania; this lastgroup of senators represents a range of political views, including thosewho believe the House bill did not do enough in terms of repeal and thosewho oppose the House bill because of the dramatic Medicaid changes. Inaddition, there has been some discussion of the group dividing into threesubgroups to handle Medicaid, tax credits and insurance market reforms.

Leadership indicated once the work group has developed a proposal, thelegislation will be considered on the Senate floor, bypassing the committeeprocess.

Budget Reconciliation Rules and How They Impact Consideration

As the Senate deliberates, Democrats will continue to oppose any repeallegislation, so Republicans will not be able to get 60 votes to pass a billthrough regular order. This means it will be critical to be able toconsider the legislation under the rules of budget reconciliation. Underthose rules, only provisions that have a direct budgetary impactcan be enacted through reconciliation.

While the Senate parliamentarian has not ruled on the House bill, manyobservers believe several areas of the bill must be removed or modifiedbecause the budget impact is merely incidental to a broader policy — or indirect. Provisions that may be ruled indirect are those changesdirectly impacting individual market insurance rules, state waivers,pre-existing conditions and essential health benefits. As a result, theHouse bill is not likely to survive Senate consideration in its currentform, and Senators charged with developing the Senate bill will have tokeep the reconciliation rules in mind as they negotiate among themselves.

This also means the Congressional Budget Office (CBO) analysis will be animportant factor in determining which provisions of the House-passed billmay be subject to a point of order under the budget reconciliation process.The CBO analysis is expected the week of May 22.

Other Issues Subject to Change

Beyond changes that may be required under reconciliation, other amendmentsare likely to come about because of differing political views in the Senateand the need to develop some consensus within the Republican Caucus. Issuesthat may be changed include: (1) Medicaid (both block grant and per capitacap provisions, as well as impact on Medicaid expansion states, anddisproportionate share hospital payments); (2) risk pool funding andstabilization funding; (3) additional assistance for rural hospitalproviders; (4) the size and structure of the current age-based tax credits;and (5) abortion provisions (Planned Parenthood funding restrictions andlimitations on use of tax credits for abortion-related services).

Senate Vote Counting Republican leaders can afford to lose only two votes.For passage, Republicans would need at least 50 votes plus the vicepresident voting to break the tie. More than three conservatives in theSenate may think the House bill still spends too much and leaves in placetoo much of the ACA. At least three Republican senators oppose some of theHouse bill’s abortion restrictions. More than three Republican senatorsrepresent states that expanded Medicaid and may want more Medicaid fundingthan provided in the House bill or may want to protect the Medicaidexpansion population.

The composition of the work group has raised eyebrows. However, thecomposition of the work group may reflect leadership’s attempt to bring acore group of members with specific and differing views together to seewhat can be developed, while also knowing other members will make their ownpolitical calculations. For example, two Republican senators up forre-election in 2018 who are considered somewhat vulnerable — Sen. JeffFlake of Arizona and Sen. Dean Heller of Nevada — will have to make theirown political calculations. Both states expanded Medicaid under the ACA,providing coverage to thousands more people in both states.

Sen. Susan Collins of Maine and Sen. Bill Cassidy of Louisiana have theirown proposal, and Sen. Collins has made it clear that not being on theworking group is not going to stop her from being active on these issues.

Impact on Other Senate Must-Do Health Legislation

Work on the AHCA may cause delays on other health care priorities. Forexample, the day after House passage, the Senate Finance Committeepostponed indefinitely its first scheduled hearing on the Children’s HealthInsurance Program (CHIP), which must be reauthorized by Sept. 30. Thatnegotiation may now become part of the larger debate over the AHCA, whichmay further complicate the situation.

What Happens After the Senate Passes Legislation?

Because the legislation that ultimately comes out of the Senate is likelyto vary significantly from the House version, the differences between thetwo approaches will need to be worked out. Normally, the House and Senateappoint conferees from each body to meet and work through the differencesand create a conference report for the House and Senate to consider. Aconference report cannot be amended on the floor of either body.

Observers have noted the potential for several scenarios that would spelldisaster for the repeal-and-replace effort. First, the conference committeemight not be able to work out differences. In that case, Congress could notmove forward. Second, the House might not be able to pass the conferencereport because anything that might pass in the Senate is not likely to gainenough of the House Freedom Caucus votes to pass in the House. Third,whatever is negotiated by the conference committee and passes the Housemight not pass the Senate because it does not have the votes to capturemoderates in the Senate.


Even if the Senate finds a consensus that allows it to pass arepeal-and-replace proposal, the path forward is delicate and fraught withpotential deal-killers for individual members. To be successful, theprocess will require compromise and a careful dance of negotiations.

If you have any questions, contact the following individual atMcGuireWoods Consulting:

StephanieKennan, Senior Vice President

A leader in public affairs solutions, McGuireWoods Consulting consistently delivers innovative strategies to achieve client goals through federal- and state-level influence, contacts and knowledge. We are a full-service government and public affairs firm with more than 100 professionals located in Florida, Georgia, Illinois, North Carolina, South Carolina, Texas, Virginia, Washington, D.C., and Europe. McGuireWoods Consulting is a subsidiary of the McGuireWoods law firm.

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