Senate Republicans unveil Obamacare replacement bill after months of closed-door crafting

Richard Cowan and Susan Cornwell

WASHINGTON, June 22 (Reuters) - U.S. Senate Republicans on Thursday unveiled their version of legislation that would replace Obamacare, proposing to kill a tax on the wealthy that pays for it and reduce aid to the poor to cut costs.

With Democrats deeply opposed to Republican attempts to overhaul former President Barack Obama's signature healthcare law, the route to passage was extremely narrow for Republicans, who control both houses of Congress. There were no assurances that moderates and conservatives will be able to bridge their differences.

The 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 House of Representatives, according to congressional sources.

Trump, who said on Wednesday that he wants 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.

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The draft bill proposes repealing the 3.8 percent net investment income tax on high earners retroactively to the start of 2017, not at some point in the future, as some analysts had speculated. 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 program 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.

Democratic leaders of Congress, who want the Obamacare law fixed but not abandoned, immediately assailed the Senate Republican version.

"The president said the House bill was mean," said Senate Democratic leader Chuck Schumer. "The Senate bill may be even meaner."

Like the House bill, the Senate would repeal a penalty associated with the individual mandate 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 stabilize the individual insurance market, allotting $15 billion per year in 2018 and 2019 and $10 billion per year in 2020 and 2021.

SEE ALSO: Trump told Republicans to 'add some money' to health care plan

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. Capitol police were on the scene and physically removing protesters.

HOSPITAL STOCKS SURGE

U.S. hospital stocks traded sharply higher after the bill was released, adding to gains from earlier in the session. HCA Healthcare Inc rose 3.8 percent, while Tenet Healthcare Corp surged 8.4 percent.

Health insurers also traded broadly higher, with large players Aetna and UnitedHealth Group each up more than 1 percent. Insurers that specialize in Medicaid also gained, with Centene up 3.4 percent and Molina Healthcare rising 2.6 percent.

The overall S&P 500 health care sector was up 1.5 percent and hit an all-time high.

The health care sector has surged this week, fueled by biotechnology stocks. The sector has gained more than 4 percent this week already, with the Nasdaq Biotechnology index jumping nearly 10 percent.

"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."

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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 the Affordable Care Act, popularly known as Obamacare, survives a Republican attack that has been underway since its passage in 2010.

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.

The law is credited with expanding health insurance to millions of Americans. Republicans say it costs too much and involves the federal government too much in healthcare. Trump made Obamacare repeal a centerpiece of his 2016 election campaign.

Democrats accuse Republicans of sabotaging Obamacare, and say the Republican bill will make health care 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 percent of adults believed the House bill would make insurance costlier for low-income Americans and people with pre-existing conditions. Only 13 percent said it would improve the quality of health care.