"It's going to be an unbelievable victory, actually, when we get it through the Senate," President Donald Trump crowed as he hosted nearly four dozen House Republicans at the White House shortly after the they and their colleagues approved legislation that would repeal and replace Obamacare on May 4.
The 217-213 margin was closer than GOP leaders would have liked—all House Democrats and many of the chamber's most conservative Republicans opposed it, though for opposite reasons.
Trump's celebratory tone belies how hard it will be to actually get legislation through the Senate, where Republicans' majority is even thinner and they are plagued by the same ideological division between moderates who want to preserve some features of the Affordable Care Act and conservatives who want to eliminate as much as possible. The GOP can afford essentially no conservative defections in the Senate if Democrats remain unanimously opposed.
Senate leaders have already acknowledged the challenge. Only minutes after the legislation passed, Senate Health, Education, Labor and Pensions Committee Chairman Lamar Alexander declared the Senate would write its own bill rather than simply attempt to make a few changes to the House version. On May 8 Senate Majority Leader Mitch McConnell appointed 13 senators to a special committee that will focus on the bill.
The House bill remains one Republicans are ambivalent about because it is seen as a clumsy attempt to address contradictory goals: fulfilling the longstanding GOP wish to ramp down the government's escalated role in healthcare oversight since the Affordable Care Act was enacted seven years ago while maintaining some key features individuals have come to expect, such as being able to get private coverage regardless of pre-existing conditions and expanded eligibility for Medicaid for people who can't afford Obamacare premiums.
The House bill forbids denial of coverage based on pre-existing conditions but doesn't prevent insurers from setting premiums so high that people who already have health problems can't afford coverage anyway. It also gives a temporary reprieve to the people who became newly eligible for Medicaid under Obamacare, but cuts funding to the states to help them cover the cost of insuring those folks and phases out the Medicaid expansion by 2020.
Sen. Alexander issued what seemed like backhanded praise for the House the day its bill passed. "I congratulate the House," he said. "The Senate will now finish work on our bill, but will take the time to get it right."
Tennessee's senior senator said his goals for the Senate bill include providing an alternative to thousands of inhabitants of his home state and millions of Americans as insurers withdraw from Affordable Care Act exchanges, lowering premium costs, gradually giving states more flexibility on Medicaid, "but doing this in a way that does not pull the rug out from under people" who rely on it and making sure individuals with pre-existing conditions have access to insurance.
The difficulty of achieving those goals will be one the GOP can no longer ignore when the Congressional Budget Office releases its estimates of the House bill's impact on the deficit and of the number of people likely to lose insurance under the new regime. The estimate is expected early the week of May 22.
For all the talk by Senate leaders of writing their own bill, they're likely to use a template similar to what their colleagues passed: pushing premiums down by making it easier to buy lower-cost, high deductible insurance plans with healthcare savings accounts to help cover out-of-pocket costs. They're also sure to make more states set up high-risk pools to help cover people with preexisting conditions but can't afford the high premiums private insurers are likely to charge. Senate Republicans also are likely to scale back the mandated coverages that are a key feature of ACA insurance and eliminate the requirement that every individual carry health insurance of pay a penalty.
"I expect they will go with high-risk pools and less regulation of what insurance has to cover," said Beth Halpern, health law partner in Hogan Lovells' U.S. LLP. "They don't want to penalize folks for not buying insurance, but want to give them incentive to get coverage," she said. "They want to use the market to drive down costs and for patients to be more cost-sensitive. One way to do that is let insurers increase what patients pay out of pocket. "
So what is the Senate likely to do that's new?
For starters, there may be some sentiment among senators to address the cost of care, an element that was neglected in the House bill. Although price controls on drugs and hospitals are abhorrent to Republicans, there are approaches to holding down costs that they might accept.
For instance, they might increase Medicaid rebates for prescription drugs and force hospitals and other providers to be transparent about their prices.
Regarding drug prices, they could allow the government to set co-pays that individuals would pay for certain drugs. Setting co-pays higher for branded drugs would encourage patients, including poor Medicaid patients who don't have co-pays now, to use cheaper generics.
"There should be market place solutions to the problem of high drug prices," said Mark Rust, managing partner of the Chicago office of Barnes & Thornburg LLP.
In the meantime providers are already reacting to Obamacare's pressures in their own way. Hospital companies have already been consolidating as the Affordable Care Act has added impetus to cost control efforts that lead to mergers. At the beginning of May, HCA Holdings (HCA) acquired five Texas hospitals from rivals Tenet Healthcare (THC - Get Report) and Community Health Systems (CYH - Get Report) . Analyst say LifePoint Hospitals (LPNT) may be another candidate for M&A if the ACHA's cuts to health care providers' revenue are enacted.
The largest health insurers, including Anthem (ANTM - Get Report) UnitedHealth Group (UNH - Get Report) , Cigna (CI - Get Report) and Humana (HUM - Get Report) have all announced plans to withdraw from all or many ACA insurance exchanges.
Rust said GOP leaders would be wise to try getting the votes of Democratic senators who are up for election this year and might be amenable to finding an alternative to what Republicans characterize as skyrocketing premiums charged for Obamacare policies.
Getting Democrats on board would also allow the Senate to go beyond the constraints of the budget reconciliation process, which limits the types to measures that can be included in the bill. With Democratic votes, the GOP sponsors would no longer be limited to including only measures eligible for a budget bill. Passing ACA repeal through the budget reconciliation process currently is being undertaken because bills coming out of it are filibuster proof and require only 51 votes to pass.
A bill that can garner 60 or more votes, however, aren't bound by the limits put on budget bills.
"If Republican leaders can peel off 7 to 10 of the Democrats who are up for reelection, then something broader could pass," he said.
Republican leaders haven't tried reaching out to Democrats yet, but that's an option if solid GOP support isn't lined up by July, when the Senate legislative package is expected to be ready, but that's an option open to McConnell.
An olive leaf from McConnell shouldn't be discounted because worse thaN a bill that divides Republicans, after seven years of campaigning on Obamacare repeal, is passing nothing.
"If the Senate can get the bill out, then there will be enormous pressure on House folks," said Mike Ferguson, leader of BakerHostetler LLP's federal policy team. "It's always hard to vote against a big piece of legislation, but [even harder] in this case. Republicans really are worse off if they don't do anything at all." Not only does enactment fulfill a longstanding campaign promise but it "breaks the legislative logjam and lets them get to reforming taxes and other things that help them play offense."
The next few weeks will be a test of McConnell's vaunted parliamentary skills.
Says Ferguson: "McConnell is a master of the legislative process. If it can happen, McConnell is the one who can do it."
"They've really got a very tough needle to thread. It's possible, just very challenging," Ferguson said.