WASHINGTON (REUTERS) - US Senate leaders on Thursday (June 22) unveiled a draft of legislation to replace Obamacare, proposing to kill a tax on the wealthy that pays for it and reduce aid to the poor to cut costs.
But the draft Bill’s fate was immediately thrown into question by a statement from Senator Rand Paul and three other conservative Republicans, who said they are “not ready to vote” for it.
Democrats need the support of only three Republicans to kill the Bill. The emergence of four Senate sceptics underscored the difficulty for Republicans of steering the legislation down a narrow path to passage. Democrats already deeply opposed Republican attempts to overhaul former President Barack Obama’s signature health-care law.
The 142-page proposal, worked out by Senate Majority Leader Mitch McConnell with other Republican leaders in secret, was welcomed by President Donald Trump. The president privately bashed as “mean” a version passed last month in the Republican-led House of Representatives, according to congressional sources.
Trump, who had said on Wednesday that he wanted a health plan “with heart,” told reporters at the White House that health-care legislation will require “a little negotiation, but it’s going to be very good.”
He said he doubted Democrats would help.
The Obamacare law, formally known as the Affordable Care Act, is credited with expanding health insurance to millions of Americans since its passage in 2010. Republicans say it costs too much and involves the federal government too much in health care. Trump made Obamacare repeal a centrepiece of his 2016 election campaign.
The Senate’s draft Bill proposes repealing the 3.8 per cent net investment income tax on high earners retroactively to the start of 2017. The tax, which affects high-income Americans and was imposed to help pay for Obamacare, has been a key target for Republicans.
The Senate Bill maintains much of the structure of the House Bill, but differs in several key ways.
It would phase out Obamacare’s expansion of the Medicaid program for the poor and disabled over three years, from 2021 to 2024, and then enact deeper cuts in the programme than the House version, beginning in 2025.
It would also allow states to add work requirements for some Medicaid enrollees.
The legislation also reshapes subsidies to low-income people for private insurance.
“The current Bill does not repeal Obamacare,” Paul said. “It does not keep our promises to the American people. I will oppose it coming to the floor in its current form, but I remain open to negotiations.”
Democratic leaders of Congress, who want the Obamacare law fixed but not abandoned, immediately attacked Senate Republicans’ version.
“The President said the House Bill was mean,” said Senate Democratic leader Chuck Schumer. “The Senate Bill may be even meaner.”
McConnell said Democrats chose not to help frame the Bill.
“I regret that our Democratic friends made clear early on that they did not want to work with us in a serious, bipartisan way to address the Obamacare status quo. But Republicans believe we have a responsibility to act, and we are,” McConnell said.
Like the House Bill, the Senate would repeal a penalty associated with the individual mandate requiring most people to have health insurance or else pay a fine. Policy experts said that would keep more young, healthy people out of the market and likely create a sicker patient pool.
The legislation would also repeal the penalty associated with the employer mandate that they provide employees health insurance.
The Senate Bill would provide money to stabilise the individual insurance market, allotting US$15 billion per year in 2018 and 2019 and US$10 billion per year in 2020 and 2021.
The Senate Bill proposes defunding Planned Parenthood for a year, but abortion-related restrictions are less stringent than the House version. There is some uncertainty over whether abortion-related provisions will meet Senate rules, but those provisions could be included in another Senate Bill.
The nonpartisan Congressional Budget Office (CBO) has estimated that the House bill would kick 23 million people off their health-care plans. The CBO is expected to weigh in on the Senate draft Bill early next week.
As lawmakers made speeches about the legislation on the Senate floor, a protest erupted outside McConnell’s personal office, with many people in wheelchairs blocking a hallway, holding signs and chanting “no cuts to Medicaid.” Capitol police were on the scene and physically removing protesters.
HOSPITAL STOCKS SURGE
US hospital stocks were trading sharply higher after the Bill was released. HCA Healthcare Inc rose 3.2 per cent, while Tenet Healthcare Corp surged 6.8 per cent.
Health insurers were also trading broadly higher with large players Aetna and UnitedHealth Group each up about 1 per cent. Insurers that specialise in Medicaid were also gaining, with Centene up 3.5 per cent and Molina Healthcare rising 3.2 per cent.
The overall S&P 500 health-care sector was up 1.5 per cent and hit an all-time high.
The health-care sector has surged this week, fuelled by biotechnology stocks. The sector has gained more than 4 per cent this week already, with the Nasdaq Biotechnology index jumping 10 per cent.
“Hospital stocks are up on this news today,” Mizuho Securities’ director of research, Sheryl Skolnick, said in a research note. “They should be, in our view, as the near-term risks would be abated if the subsidy and Medicaid provisions hold through Senate and House negotiations.”
The subsidies enabling low-income people to buy private health insurance are expected to be linked to recipients’ income in the Senate Bill, a “major improvement” from a measure approved last month by the House that tied them solely to age, Republican Senator Susan Collins said.
Some of the Senate Bill’s provisions could be political land mines, with individual senators’ reactions crucial to determining whether or not Obamacare survives a Republican attack that has been under way since its 2010 enactment.
But, even though Republicans now have control of the White House as well as both chambers of Congress, they have struggled to make good on their bold campaign promises to repeal and replace Obamacare.
Democrats accuse Republicans of sabotaging Obamacare, and say the Republican Bill will make healthcare unaffordable for poorer Americans while cutting taxes for the wealthy.
McConnell may have a tough job convincing enough Republican senators that the Senate Bill improves on the House version.
A Reuters/Ipsos poll this month found nearly 60 per cent of adults believed the House Bill would make insurance costlier for low-income Americans and people with pre-existing conditions. Only 13 per cent said it would improve the quality of health care.