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Dazed GOP bolts Washington in health care disarray

Senate Republicans skipped town on Thursday afternoon facing stiff internal opposition to their health care proposal and a Fourth of July recess in which critics will pummel their effort to repeal Obamacare.

Though the Senate whirred to life with deal-making between Senate Majority Leader Mitch McConnell and his members, senators were dazed by the up-and-down week and nowhere near a plan that could get 50 votes. The GOP is planning to write new language to be analyzed by Friday, but were far from reaching a broad agreement as senators had hoped.

“In some ways, we’re going around in circles, but I think we’re getting closer on some elements,” said Sen. Jeff Flake (R-Ariz.). “This is complex.”

And there’s no guarantee that time back home will make things better.

“Our members seem to have too much information and are almost in mental lockdown,” said one Republican senator, who was perplexed at where the party goes from here. “I can’t imagine going home for 10 days is helpful.”

The best party leaders could hope for was to send a collection of new proposals to the Congressional Budget Office to analyze over the recess that would likely include maintaining Obamacare’s so-called net investment income tax that levels a surcharge on some high-income earners. The money would then be used to help low-income people afford health care.

Other sweeteners likely to be assessed: Allowing pre-tax health savings accounts to pay for insurance premiums, an ask by Sen. Ted Cruz of Texas, and pouring $45 billion into fighting opioids, preferred by Rust Belt senators whose states are wracked by drug epidemics.

But the discussion on Thursday still seemed to fall short of appeasing either faction.

Cruz and his allies were pushing to further gut Obamacare’s regulatory regime in a manner that Republican leaders warned might not pass the Senate parliamentarian’s muster, including trying to establish two insurance pools: One for people with pre-existing conditions and another for those without. Republicans also fretted that doing so could undermine the Senate GOP's desire to leave Obamacare's pre-existing condition protections untouched.

And the opioid funding is not enough for moderates to come on board; holdouts pushing for more Medicaid money include Sens. Shelley Moore Capito of West Virginia, Rob Portman of Ohio and Dean Heller of Nevada.

“My position hasn’t changed one way or the other,” said Heller, the most vulnerable incumbent Republican. “It’s not about getting me to yes. It’s about getting Nevada to yes. … Low-income families, should they have health insurance? The answer is yes.”

There's been a clear uptick in negotiations.

McConnell hosted Cruz, and Sens. Bob Corker of Tennessee and Ron Johnson of Wisconsin, as well as Vice President Mike Pence in his office to try to revive the flagging effort. But momentum had slowed by the end of the Senate’s tumultuous week, which included a Monday CBO score showing 22 million in coverage losses, a Tuesday decision to pull the bill and visit the White House, and a new round of bill drafting on Wednesday and Thursday.

"Has there been circularity of argument? Sure. Has there been frustration? Sure. Has there been passion? Sure," Johnson said after leaving McConnell's office around 5 p.m. "But, I'm encouraged."

Still, any progress this week was incremental at best, and some Republicans were confused at what would come next after a party lunch. Some said a new bill draft would come on Friday, while others said such a deadline was impossible to meet.

Republican leaders said their hope was now a vote on the bill by mid-July, with the August recess serving as the hard deadline.

The most substantive development came at midday, when senators said they were near agreement on keeping Obamacare’s net investment tax and Medicare tax; the first draft of the bill had repealed both. That move appeals to moderates, but likely would turn off conservatives who are pushing to dismantle as much of the 2010 law as possible, including its taxes.

"There's a significant amount of interest among, I would say, a good group of members for retaining that [money] for some purpose," South Dakota Sen. John Thune, the third-ranking Senate Republican, said in an interview. But he added that keeping Obamacare taxes could cost a crucial number of conservative votes: "It's not a big number, but it's enough."

While McConnell’s team might be able to satisfy more centrist GOP senators with additional funding, conservatives remain a huge headache, according to senators and aides.

Cruz and his allies are still pushing to gut Obamacare’s regulatory structure, but Republican sources are skeptical that the Senate parliamentarian will allow it. That raises a key question: Can the party’s right flank support what’s going to amount to only a partial repeal of the law?

“Mitch might try and breaks arms” to get the bill through, said a second Republican senator. “I think it needs to sit in the crock-pot a little longer.”

As he entered McConnell's office on Thursday morning, Corker confirmed the party is leaning toward maintaining Obamacare's tax on wealthy individuals’ investments. The GOP would then reallocate that money to help more people from low-income households pay for insurance, although Thune said some Republicans want to use those funds for deficit-reduction purposes instead.

No final decision has been made, Republicans said, but the party is leaning strongly toward at least partly reshaping the bill to be less of a tax cut for the wealthy and more to supply health insurance options to the working poor.

“We are going to figure out a way, I believe, before Friday comes, to greatly enhance the ability of lower-income Americans to buy health insurance on the exchanges that actually covers them. And my sense is the [investment tax] is going to go away,” Corker said. “It’s not an acceptable proposition to have a bill that increases the burden on lower-income citizens and lessens the burden on wealthy citizens.”

Killing or delaying the tax cuts will give the party significantly more money to play with and potentially change the optics of a bill portrayed by Democrats and some GOP critics as a tax cut for the rich at the expense of curtailing benefits for the poor.

The "net investment tax" imposes a 3.8 percent charge on some investments by people who make more than $250,000 a year, in addition to the capital gains tax. Centrist and deal-making senators are ready to it to take away critics' ammunition. Corker and Sen. Susan Collins of Maine have both raised the issue in party lunches, Republicans said.

Republicans also are considering keeping a Medicare tax increase from Obamacare that their initial bill would cut. Combined, retaining the investment tax and the Medicare tax could give the party more than $200 billion to invest in health care, on top of the $188 billion in savings the GOP has to spend from its initial CBO analysis.

"I am" open to keeping the net investment tax, said Sen. Marco Rubio of Florida. "But only if it's part of a plan that works, not just simply growing government for revenue purposes."

But conservatives such as Sen. Pat Toomey of Pennsylvania and Rand Paul of Kentucky signaled that keeping the tax would be a potential deal-breaker.

"I expect that we'll be repealing all of the taxes in Obamacare," Toomey said.

Movement on tax cuts followed a Wednesday evening offer among White House and congressional negotiators. That plan would deliver $45 billion to fight opioid addiction — aimed at moderates — and establish health savings accounts to allow people to pay for insurance premiums with pre-tax money — aimed at conservatives.

Asked whether the additional opioid funds would get her to “yes,” Capito responded: "I'm not there yet. I know that."

For more, visit Politico.

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