Will Cruz’s Plan Be the ‘Game Changer’ in the Senate Health Care Stalemate?

Will Cruz’s Plan Be the ‘Game Changer’ in the Senate Health Care Stalemate?

iStockphoto/The Fiscal Times

It’s now clear that Senate Republicans are no closer to a consensus on repealing and replacing the Affordable Care Act than they were before they staggered out of town for the July 4th recess, and GOP leaders are signaling that it may take another week or two before they risk taking a vote.

Conservative Republicans are still adamant that the legislation must eliminate Obamacare coverage mandates, even more, to lower premiums, rapidly phase out expanded Medicaid coverage, and provide higher limits on tax exemptions for health savings accounts.

Related: How the Opioid Crisis Is Damaging the US Economy

More moderate Republicans, meanwhile, stung by a Congressional Budget Office (CBO) estimate that as many as 22 million Americans could lose their insurance coverage under the Senate GOP approach, are demanding more generous tax credits for middle class people, a much slower phase-out of expanded Medicaid and less draconian cuts in the Medicaid program overall.

Add to that the confusion President Trump sparked shortly before departing for the Group of 20 economic summit in Germany by suggesting that Congress might be better off repealing Obamacare now but putting off decisions on a replacement plan until later, and it’s not surprising Senate Majority Leader Mitch McConnell (R-KY) and other Republican leaders are hedging their bets on when a bill might be sent to the floor for action.

McConnell is wheeling and dealing to bring his party together before Congress departs once again for an August recess. While McConnell is systematically attempting to patch together a 50 vote GOP majority necessary to ram through a bill under special budget reconciliation rules, so far there are no signs of a breakthrough like the one that enabled House Republicans to narrowly pass their version of the plan in early May.

That House victory came about after Rep. Tom MacArthur, a moderate Republican from New Jersey, and conservative Freedom Caucus Chair Mark Meadows, negotiated a plan that would allow states to seek waivers to weaken several important Obamacare insurance reforms that protect people with pre-existing medical conditions from being denied coverage or being forced to pay higher premiums based on their health backgrounds.

Related: A New Republican Agenda Is Taking Shape—and It Means Tax Increases

That approach, contained in the final version of the House bill, calls for people with serious pre-existing medical problems to be covered in a special “high-risk” insurance pool subsidized by the federal government, while others would have access to cheaper, less comprehensive insurance coverage.

Critics warned that the House-passed plan would effectively render older, sicker people second-class citizens when it came to health insurance. That’s because many likely wouldn’t be able to afford the premiums and out of pocket costs for the new brand of insurance –even with government subsidies.

When McConnell finally unveiled the Senate GOP version of the legislation late last month, the MacArthur-Meadows provision was nowhere to be seen. But in the final weeks of negotiations, Republican Sens. Ted Cruz of Texas and Mike Lee of Utah are pressing for a plan of their own to revive the high-risk-pool concept that many conservatives believe will prove to be a game changer.

Cruz and Lee have been working quietly behind the scenes for weeks to devise a proposal that would appease both conservatives and moderates. Essentially, it would allow insurers to sell cheap health care plans, largely shorn of Obamacare essential benefits like maternity care and mental health and substance abuse treatment, if they also sell at least one plan that provides all that coverage.

Related: Trump Once Again Scrambles GOP’s Efforts to Repeal and Replace Obamacare

While the House-passed plan would allocate modest funding to help states pay for people with high health care cost – but not enough to make policies affordable for many – Cruz and Lee would make the subsidies for the comprehensive policies automatic and unlimited, and pegged to the rising cost of the coverage.

On the face of it, at least, the Cruz-Lee approach appears to be a bridge-builder between conservatives who want to gut as many of the Obamacare mandated coverage as possible to enable insurers to bring down the costs of their premiums and moderates who fear the GOP plan would render older and sicker Americans second-class citizens for the purposes of coverage.

But the biggest drawback to the Cruz-Lee plan – as The New York Times noted recently – is that it is structured in such a way that only people with relatively low incomes would qualify for the tax credits needed to cover the premiums and co-payments. For millions of other more middle-class Americans, the cost of the comprehensive health insurance would be out of reach.

For instance, people who bought the Obamacare-style plans would be eligible for subsidies that limit their cost, provided their income was below roughly $42,000 per year for a single person. And those who earn more — or wish to buy less expensive plans without all the benefits -- may also get a discount on those premiums, in the form of pre-tax health savings account. Yet many people who aren’t really poor but not really middle-class would likely find themselves priced out of the market.

Related: How the GOP Health Plan Could Lead to Drug Rationing and Price Controls

Senate Minority Leader Chuck Schumer (D-NY) said recently that "Americans with pre-existing conditions will almost certainly be left without access to affordable and quality health care, making this even worse than the House bill on this issue.”

Joseph Antos, a health care expert with the conservative-leaning American Enterprise Institute, said in an interview that the impact of the Cruz-Lee approach is difficult to predict.

“There’s no question that the premiums would be higher with a more expansive plan,” he said Thursday. “But I think it’s unclear how much higher, and that depends on just how far insurers go – and just how far insurance commissioners are willing to let them go in terms of what they define as appropriate insurance in their states.”

The White House has expressed interest in the Cruz-Lee approach, and on Wednesday it picked up the endorsement of two conservative groups, the Club for Growth and FreedomWorks. What’s more, the GOP leadership has taken the plan seriously enough to submit it along with the revised McConnell version to the Congressional Budget Office for analysis of its long-term cost, premium levels and the number of people who would lose their coverage in the coming decade.

Related: Here’s Why Tweaks and Fixes to the Senate Health Bill May Not Be Enough

Cruz who once called McConnell a “liar” on the Senate floor and was instrumental in sparking the 2013 partial government shutdown to defund the Affordable Care Act, surprised many by his largely low-key style in pushing for adoption of his “Consumer Freedom Amendment.”

“The challenge is we’ve got a bunch of moderate Republicans who want to keep those mandates,” Cruz said in a radio interview Wednesday. Those regulations include the ten “essential” benefits under Obamacare and the so-called “community rating” that prevents insurers from charging higher premiums to people with pre-existing conditions.   

“If we include the Consumer Freedom Amendment, I think conservatives will support this bill, it would make it a much better bill, but that remains an open question,” Cruz said. “I think we’re going to have some vigorous debates over the coming days and the coming weeks on that question.” 

McConnell said Thursday that if his party is unable to muster 50 votes for its plan to overhaul Obamacare, it will have no choice but to draft a more modest bill with Democrats to support the law’s existing insurance markets – the first time he conceded the possibility of working across the aisle.