Senate Republicans walk tight rope with new healthcare bill

WASHINGTON, July 13 (Reuters) - Senate Republican leaders, aiming to salvage efforts backed by President Donald Trump to dismantle the Obamacare law, unveiled on Thursday revised legislation that lets insurers sell cheap, bare-bones healthcare policies and retains key taxes on the wealthy.

U.S. Senate Majority Leader Mitch McConnell, known as a skillful tactician, released the reworked legislation in a bid to unite disparate Republican factions and make good on his party's seven-year mission to gut Democratic former President Barack Obama's signature legislative achievement.

McConnell was walking a tightrope with Democrats united against the bill. He cannot afford to lose more than two Republican senators to win passage. Two - moderate Susan Collins and conservative Rand Paul - said they would oppose even bringing the revised bill up for debate, and others expressed reservations.

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Two other Republican senators - Lindsey Graham and Bill Cassidy - announced an alternative plan.

The proposal replaces an earlier one that deeply divided Trump's fellow Republicans, who control the Senate, drawing opposition from both moderates and hard-line conservatives. McConnell has planned for a vote on the new bill next week.

The provision allowing insurers to offer stripped-down, low-cost healthcare plans that do not comply with Obamacare regulations to cover certain health benefits, as proposed by Senator Ted Cruz, was aimed at winning over holdout conservatives.

The benefits currently required include maternity and newborn care, mental health services and addiction treatment, outpatient care, hospitalization, emergency room visits and prescription drugs.

Insurer groups, including the national Blue Cross Blue Shield Association, have derided these "skinny plans," saying they would raise insurance premiums, destabilize the individual insurance market and undermine protections for pre-existing medical conditions. Moderate senators could balk at the provision for the same reasons.

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The legislation represented a retreat from long-standing Republican aspirations to dump Obamacare-related taxes.

It retains two taxes on the wealthy that helped pay for the Obamacare law that the previous version would have repealed. They are: a 3.8 percent tax on net investment income for individuals earning more than $200,000 and couples earning more than $250,000; and a 0.9 percent surtax for the Medicare insurance program for the elderly on people with those incomes.

It also kept Obamacare's limits on corporate tax deductions for executive pay in the health insurance industry.

The new bill provides additional funds to help stabilize the individual insurance market, providing $70 billion on top of the $112 billion in the original bill. That would help insurers hold down growth in the cost of insurance premiums and help lower-income insurance holders cover out-of-pocket medical expenses.

The bill retains the previous bill's phase-out of the Obamacare expansion of the Medicaid government health insurance program for the poor and disabled and sharp cuts to federal Medicaid spending beginning in 2025.

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Although the bill retains the two taxes on the wealthy that would have been eliminated in the earlier version, it would still repeal certain other Obamacare taxes, end a penalty on individuals who do not obtain insurance and overhaul Obamacare subsidies to help people buy insurance with tax credits.

Moderate Republicans were spurned in their desire to see a reduction in Medicaid cuts in the revised version.

Hospital and insurer groups have spoken out against the Senate Republican approach, particularly proposed Medicaid cuts. The cuts would result in lower revenues for hospital companies like Community Health Systems Inc and Medicaid insurance specialists like Molina Healthcare and Centene Corp .

Ipsita Smolinski, managing director at healthcare research consulting firm Capitol Street, said there were some positives for businesses including the provisions eliminating taxes on the pharmaceutical, medical device and health insurance industries.

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Another positive for health insurers is the additional funds to help stabilize the individual exchange market, Smolinski said.

The Affordable Care Act, dubbed Obamacare, expanded health insurance coverage to some 20 million people, in large part by expanding Medicaid.

The new bill includes another $45 billion for fighting the opioid addiction epidemic that has hit large parts of the nation, on top of the $2 billion in the earlier version.

The nonpartisan Congressional Budget Office is due to evaluate the new bill in the coming days. It forecast that the previous version would have increased the number of people without health insurance by 22 million by 2026.


Repealing and replacing Obamacare, which Republicans fault as a costly government intrusion into the healthcare system, was a top campaign promise for Trump, who was monitoring the Senate developments during his visit to France.

"The American people deserve better than the pain of Obamacare. They deserve better care. And the time to deliver that to them is next week," said McConnell, who was forced two weeks ago to put off a scheduled vote on the first bill after a revolt within Republican ranks.

The House of Representatives on May 4 passed its own version of healthcare legislation. Trump on Wednesday said he would be "very angry" if Congress does not achieve final passage.

Republicans have a 52-48 Senate majority, with Vice President Mike Pence able to cast a potential tie-breaking vote. If the Senate passes a bill, it would have to go back to the House for its approval.

The alternative offered by Graham and Cassidy would redirect much of Obamacare's federal funding for health insurance to states.

The continuing lack of consensus among Republicans on what to do with Obamacare after calling for its demise since Congress passed it in 2010 with only Democratic votes shows that it is no sure thing that Trump's party will be able to get the job done.

Healthcare is Trump's first major legislative initiative. Failure would call into question his party's ability to govern despite controlling both chambers of Congress and the White House.

(Additional reporting by Yasmeen Abutaleb, Caroline Humer, Eric Walsh, Lewis Krauskopf and Richard Cowan; Writing by Will Dunham; Editing by Jonathan Oatis and Leslie Adler)