Senate Republicans are weighing a two-step process to replace Obamacare that would postpone a repealuntil 2020, as they seek to draft a more modest version than aHouse plan that nonpartisan analysts said would undermine someinsurance markets.

Republicans -- in the early stages of private talks on theSenate plan -- say they may first take action to stabilize premiumcosts in Obamacare’s insurance-purchasing exchanges in 2018 and2019. Major insurers have said they will leave the individualmarket in vast regions of states including North Dakota, Iowa andMissouri.

A Senate plan is likely to continue subsidies that helplow-income Americans with co-pays and deductibles, saidthird-ranking Republican John Thune of South Dakota. White Housebudget director Mick Mulvaney said Thursday the administrationhasn’t committed to paying subsidies due in June -- whichwould create additional uncertainty for insurers as they set ratesfor next year.

“There clearly has to be a short-term solution that works withthe transition until some of our long-term policy changes can takeeffect,” Thune told reporters. “There’s got to be certainty in themarketplace.”

The private Senate GOP negotiations include a 13-memberleadership-controlled working group as well as almost dailyclosed-door discussions among all Senate Republicans. In addition,Republican Senator Susan Collins of Maine has convened bipartisantalks with about a dozen senators.

CBO report

Republicans in the Senate are stepping up their efforts to buildconsensus after the nonpartisan Congressional Budget Office said Wednesday thatthe House plan narrowly passed May 4 would result in 23 millionmore people without insurance and, in some states, plans that aretoo costly for older or sicker people.

Democrats in both chambers are united against efforts to replacethe 2010 Affordable Care Act and said yesterday the CBO assessmentprovides added ammunition for the Senate fight. Senate MinorityLeader Chuck Schumer said the report should be the “final nail inthe coffin” in the Republican drive to end Obamacare.

“The report makes clear: Trumpcare would be a cancer on theAmerican health-care system, causing costs to skyrocket, makingcoverage unaffordable for those with pre-existing conditions andmany seniors, and kicking millions off their health insurance,”said Schumer of New York.

A Quinnipiac University national poll released Thursday saidAmericans voters disapprove of the House measure by 57 to 20percent. The May 17-23 poll of 1,404 voters had a margin of errorof plus or minus 3 percentage points.

Senate Republican leaders say they expect to try to pass a billwith only GOP votes. The party controls the Senate 52-48, and theparliamentarian will determine which parts of a bill could advanceunder streamlined procedures that can pass with 50 votes plus VicePresident Mike Pence’s tie-breaker.

Obamacare taxes

Whether the GOP can attract 50 votes remains to be seen.Senators have indicated the talks have spent little time on perhapsthe toughest issue: How to pay for a plan that would cover morepeople and offer lower premiums than the House bill.

That would require retaining some of about $800 billion inObamacare taxes the House measure repeals, orfinding other cost savings in the federal budget.

“I think we ought to try to look for savings anywhere we canfind them,” said Senate Finance Committee Chairman Orrin Hatch, aUtah Republican. “But my experience is that we don’t find manysavings.”

The subsidies for low-income insurance customers total about $7billion a year. BlueCross BlueShield of North Carolinaannounced Thursday to raise its rates on average by 22.9 percentnext year -- but if the subsidies were funded, the increase wouldbe 8.8 percent, according to Brian Tajlili, the insurer’s head ofactuarial and pricing services.

The health insurer has seen results from Obamacare plans improvemarkedly after raising rates, but the uncertainty from Washingtonis threatening those gains. “We’re seeing the market begin tostabilize after three years of coverage,” Tajlili said in astatement.

Senate Republicans say there is a growing consensus that theywant a slower phase-out of Obamacare’s expansion of Medicaid healthcoverage for the poor than in the House bill, which would cut theprogram by about $800 billion.

Senators from states that elected to take advantage of theMedicaid expansion, including Rob Portman of Ohio, want aseveral-year phase-out to avoid a “cliff” that would occur if theexpansion ended in 2020 as the House bill reqiuires.

Republican Senator John Hoeven of North Dakota, a member of the13-person working group, said the longer phase-out has somesupport, as well as a proposal to give states more flexibility toshape their own approaches under Medicaid.

He said there’s some early interest in his idea to allow statesthat achieve Medicaid cost savings to retain the money as arainy-day fund for future years.

‘A bad year’

“Then if they have a bad year they draw on those savings,”Hoeven said.

Meanwhile, Republicans including Lamar Alexander of Tennesseeand Thune are addressing the affordability of individual coverageon the insurance exchanges, including the tax credits available toconsumers. Thune said there is momentum behind his idea of ensuringthat tax credits are based not just on age, as the House billallows, but also on income levels.

“I think they did some things with the tax credit that we wouldwant to refine and change it, for sure,” Thune said. “If that’s howyou want to cover the people who aren’t eligible for Medicaid butcan’t afford to buy insurance on the individual marketplace ontheir own, you have to have a mechanism to do that.”

Members of the 13-member working group and in Collins’ group saythere is little interest in using state-run high-risk insurancepools to cover the chronically ill and those with pre-existingconditions. The House bill allows states to opt out of Obamacare’sban on higher premiums for those with pre-existing conditions ifthey provide high-risk pools, with federal funding help.

High-cost customers

Because of evidence that high-risk pools are expensive and havebeen underfunded, Senate Republicans say they’re weighing usingreinsurance instead. That approach would provide money toindividual-market insurers to help pay for high-cost customers --an effort to discourage insurers from setting higher premiums forthose people.

“High-risk pools have not had a stellar record,” said SenatorBill Cassidy, a Louisiana Republican who is part of the bipartisannegotiations. “I think reinsurance is a better way to go.”

“There is growing consensus" for the reinsurance idea, Hoevensaid.

Senators say they’re examining the idea of automaticallyenrolling people who lack coverage into private insurance plans andare seeking advice from outside groups about whether that’s a goodreplacement for Obamacare’s mandate that people have insurance orpay a penalty.

“We haven’t figured out exactly how you identify people and getthem auto-enrolled,” Thune said. “I think that would be achallenge, but it’s certainly an idea that’s of interest tome.”

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