Senate GOP Health Bill Would End ACA Penalties, Cut Taxes on High Incomes -- 3rd Update

By Stephanie Armour, Kristina Peterson and Louise Radnofsky Features Dow Jones Newswires

Senate Republican leaders released a health overhaul Thursday that would undo large parts of the Affordable Care Act, including its expansion of the Medicaid program for the poor and disabled and a requirement that most Americans pay a penalty if they don't have insurance.

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The release of the 142-page bill, after its elements had been closely held by Republican leaders, marks the launch of a fast-moving process that Republicans hope will culminate in a new health law's passage before Congress's August recess. But several Senate Republicans have expressed concerns about the bill's outlines, and even if the Senate does pass it late next week, as GOP leaders hope, it would still have to be approved by the House to become law.

The plan, whose development was overseen by Senate Majority Leader Mitch McConnell (R., Ky.), attempts to strike a balance between the demands of conservative GOP senators who want an aggressive repeal of the ACA, sometimes called Obamacare, and more centrist lawmakers eager to retain some aspects of the law.

The bill relies on the 2010 law's current tax credits to provide subsidies to people who don't get health insurance on the job. But this legislation would tighten the income eligibility for the assistance, meaning fewer people would be able to get the subsidies. The credits would also be less robust than under the ACA.

The Senate proposal would cap states' Medicaid funding from Washington for the first time in the program's history. Instead, states would be given a choice of the formula used -- "block grants" or "per capita caps" -- to curb it under the bill. The phaseout of federal funding for the ACA's Medicaid expansion would happen more gradually than in the House bill, but the Senate measure would ultimately make deeper cuts to the program.

Like the House bill, the Senate bill would repeal a 3.8% tax on investment income retroactively to January 2017 and delay the repeal of a 0.9% payroll tax until 2023. Both of those taxes only apply to individuals making more than $200,000 and married couples making more than $250,000.

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Senate Republicans were largely tight-lipped as they emerged from a closed-door meeting that lasted nearly 90 minutes as Mr. McConnell briefed them on the bill's contents.

Although Senate GOP leaders praised the initial draft of the bill, they quickly noted that the text was subject to change before a vote expected next week. With 52 Republican senators, Mr. McConnell can lose no more than two GOP votes for the bill to pass under a special process tied to the budget.

"Right now we've got members who are going to be interested in seeing it, digesting it, and then looking to see if there are things we can do to refine it, make it more acceptable to more members in our conference to get to 50" votes, said Sen. John Thune (R., S.D.).

In particular, the tax credits and phaseout of the Medicaid expansion are likely to come under scrutiny, and Republicans may seek to "dial" their levels up or down, Mr. Thune said. "Right now the challenge is: how do we get to 50?"

If the Senate splits 50-50, Vice President Mike Pence would break the tie. The challenge for GOP leaders is that both conservative and more centrist Republican senators have expressed reservations about parts of the bill, leaving Mr. McConnell little room to maneuver.

"I'm pleased that we were able to arrive at a draft that incorporates input from so many different members, who represent so many different constituents, who are facing so many different challenges," Mr. McConnell said Thursday on the Senate floor.

Senate Democrats criticized the bill for curbing Medicaid funding while repealing taxes on the wealthy, and referred to President Donald Trump's recent characterization of the House version of the bill as "mean."

"The House and Senate bills should be known as 'mean' and 'meaner,' " said Sen. Ron Wyden of Oregon, the top Democrat on the Senate Finance Committee, which oversees the government's health-care programs. "Republicans will keep telling Americans they're fixing their health care right up until the minute it's taken away."

Senate Minority Leader Chuck Schumer (D., N.Y.) echoed the criticism on the Senate floor, which prompted a testy exchange as Mr. McConnell fired back, "The speech you just heard was about a bill he hasn't seen." Mr. Schumer responded that he had seen the document posted online.

The bill also suspends a so-called "Cadillac" tax on generous employer health benefits through 2025. It would strip federal funding from Planned Parenthood Federation of America for one year, and it prohibits tax credits from being used to purchase plans that offer abortion coverage.

The Senate measure also would give states leeway to roll back the ACA's insurance regulations and consumer protections.

Mr. McConnell has set a rapid-fire timeline for passage. An analysis by the nonpartisan Congressional Budget Office, laying out the bill's effect on the budget and the number of uninsured, could come as early as Monday. The CBO report on the House-passed bill, released late last month, showed it would leave 23 million more people uninsured while reducing the cumulative federal deficit by $119 billion in the next decade compared with current law.

Republican Senators, some of whom hadn't seen text of the draft bill until its release, now have a week to digest it before a possible vote in advance of their July 4 recess. It would then be taken up by House Republicans, who also are expected to pursue fast passage.

In an event in the White House's East Room on Thursday, Mr. Trump said he hoped the Senate would pass a health bill "with heart" and said he was pleased with the legislation unveiled earlier in the day. "A little negotiation but it's gonna be good," he said.

--Richard Rubin and Rebecca Ballhaus contributed to this article.

Write to Stephanie Armour at stephanie.armour@wsj.com, Kristina Peterson at kristina.peterson@wsj.com and Louise Radnofsky at louise.radnofsky@wsj.com

(END) Dow Jones Newswires

June 22, 2017 12:25 ET (16:25 GMT)